Experts Predict Economic Expansion for 2015 and 2016

Experts predict a few more strong laps around this race track we call our economy. Fifty forecasting experts with the National Association of Business Economics (NABE) believe the U.S. economy will grow at a rapid pace over the next two years. They suspect Gross Domestic Product (GDP) will increase on average 3.1% in 2015 and 2.9% in 2016.  

Few can complain about the potential win-win situation brewing that will reward businesses with higher sales and better employment opportunities for job seekers. Experts believe the economy will improve to a point where unemployment dips under 5% by the end of 2016.

The advantages of polling experts can help gauge the overall likelihood of success for the nation. These economic gurus have become successful in their fields and have opinions on economic growth and development. Funneling their opinions into useful metrics helps see that the average opinion is positive.

Each expert sifts the questionnaire information through their personal experiences, judgments and opinions to come to a conclusion about each question. These conclusions are averaged to get the statistics seen above. The more people involved in the forecast the greater the validity of the results.

Positive news and accurate information often draws investment from interested stakeholders that desire to improve their profit margins.  For example, if you own a business that is likely to benefit from a growing economy and are holding onto cash the positive news may prompt additional investment. This can in turn generate more employment; 250,000 per month worth.

Growing economies, lower unemployment, higher investment, and sustainable spending are positive news for any government that seeks to place in the finals of racing nations.  That doesn’t mean any of this will come to pass but that industry experts believe it is possible and perhaps even likely. If you are a business investor or a person seeking to gain from employment opportunities these numbers should be refreshing.

http://nabe.com/NABE_Outlook_March_2015

San Diego Employment Numbers Trip But Could Regain Footing from High Technology Firms

2014 wasn't a great year for job creation in San Diego as employment numbers left much to be desired. According to the Employment Development Department 30,208 jobs were added to the San Diego economy in 2014 missing economist projections (1). Despite slower than expected growth in construction, professional, health, and scientific jobs the service industry added the most jobs with a 4.86% increase. Employment rates may be on the rise if San Diego focuses closely on high growth industries that already have a solid present in the area.

The numbers are not dismal and could indicate a upward swing for 2015. Service jobs are relatively easy to add and mark a level of rising consumer spending on travel, restaurants, and leisure services that mark optimism. These are some of the first jobs added to the economy before higher paying jobs also make their way onto the market.

Higher paying employment comes after lower skilled service jobs have made their initial appearance. Industries that have higher paying positions add significantly to income and wages in the area but take a little longer to kick in. Companies making larger investments in skill, recruitment, relocation, compensation and salary only add jobs when needed.

There has been a healthy discussion of encouraging technology firms in San Diego. This discussion, in addition to other high growth fields, helps in improving the future labor market by aligning the economy to industries in demand. For example, small business accounts for 2/3 rds of job creation and high growth firms 35% of job gains during the years 2009-2012 (Clayton, et. al. 2013).

Technology industries are in hot demand around the world and gaining high levels of investment. Companies that are in the high technology sectors of pharmaceutical, chemical, communication, navigation, agricultural equipment, science, etc... find themselves growing faster than many other companies. Their abilities to obtain new resources, based on market demand, pushes them forward.

San Diego has a  solid high technology based that can be used to create stronger platforms for growth. Cities that put in place policies that encourage the development and investment in growth industries often magnify growth in these sectors (Jenkins, et. al., 2006). The policies should help funnel international investment into industries that are currently, or will soon be, in high demand globally.

Encouraging those industries that are likely to provide the highest paying jobs and greatest amount of overall economic growth is smart government. It provides an opportunity to employee more people and raise the standard of living for a lot of people. Likewise, investors want a return on capital and high growth industries offer that opportunity. Making sure legislative hurdles are lowered and letting the world know of the local investment offerings in San Diego can make a huge difference in industries that are ready to break out onto the international market.

Clayton, et. al. (2013). High-employment-growth firms: defining and counting them. Monthly Labor Review, 136 (6).

Jenkins, et. al. (2006). Do high technology policies work? High technology industry employment growth in U.S. Metropolitan Areas, 1988-1998. Social Forces, 85 (1). 

The Footprints to a Solid Career

Rome wasn't built in a day and neither will your career. Successful careers take a consider amount of effort and time to develop and may not always end the same way you planned when you started. As the market changes and adjusts it is beneficial to roll with the changes and seek out opportunities to learn and develop. At various stages of your life you will be in different career positions that can contribute to your professional development.

Young graduates often assume they are going to conquer the world solely through elbow grease. This enthusiasm manifests itself in excitement, motivation, and participation. Even though the pay is not high the new job offers a level of independence, a new apartment, a car, and lots of other goodies that were previously out of reach.

Eventually that enthusiasm will wane as they become accustomed to their new money and find out that what they earn is not nearly to feed a family and still live a comfortable lifestyle. They may start to move out of their starter jobs to take promotions and raises in other companies. It is through this movement that companies loose talent and other companies gain new talent; the market shifts its resources.

During their mid career most professionals have worked for multiple companies and may have switched their careers at least once if not a couple of times. The knowledge gained makes them a valuable asset to any organization. Still young enough to learn and old enough to apply working knowledge they will be in the sweet spot for growth. Adaptability and knowledge are sufficient to get them that first management job or a higher paying position when warranted.

In the later part of a career position and power may not be the most important determinant of one's career. It is entirely possible that leaving a legacy for others and engaging in those activities that are intrinsically pleasing may have more appeal when compared to more of the same. Seasoned managers start to mentor and coach younger employees in an effort to leave some type of mark on the organization and society.

Throughout a career cycle a person will work for a number of different organizations and may even switch careers a number of times. It is necessary to be adaptable and continue learning in order to grow and develop. At the moment one closes their mind they will stop growing and it is important to ensure one is  more of a sponge that soaks knowledge than a rock that sinks to the bottom.

In your path don't fret about having to switch careers. It is a natural part of life in a fast paced American economy. The average person can expect to switch their career up to seven times in their lifetime (Bialick, 2010). A high number I agree but not necessarily implausible as I have seen Generation X switch at least 3 times by their late 30s.

The biggest challenge you are likely to face is being open-minded and continually learning. We get stuck in our ways, do the same things over and over, and live by a routine. Sometimes it is a great way to function but at other times it can lead us down a path where we become more disconnected from future employment opportunities. You don't want to someday lose your job you are stuck without the skills needed to find something that pays better. Make sure you continue to learn, adapt, grow, develop, and change toward improvement.

Bialick, C. (Sept. 4th, 2010). Seven Careers in a Lifetime? Think Twice, Researchers Say. Wall Street Journal. Retrieved http://www.wsj.com/articles/SB10001424052748704206804575468162805877990

2015 Picks Up Employment Steam- Will You Will Be Getting a Raise?

The American economy is picking up steam and zooming forward. According to the Bureau of Labor Statistics the economy added 257,000 non-farm payroll positions in January (1). U.S. Labor Secretary Thomas E. Perez characterizes this employment increase as, "2015 is picking up right where 2014 left off – with strong, steady, sustained job growth that is leading a dynamic recovery" (2).  Great news that could have an impact on future wages but who will be getting a raise depends on market position.

Even though the unemployment creaked up from 5.6 to 5.7% much of this has been attributed to people jumping back into the job market. When people are not searching for work their numbers are not counted. However, as they engage back in their searches and applying the numbers become more accurate as previously unaccounted for people rejoin the statistical measurement. The value of labor is determined in part by the availability of labor; lower unemployment numbers are good.

The jobless rate is different based upon the demographics of the person. Jobless rates for adult men (5.3 percent), teenagers (18.8 percent) adult women (5.1 percent), whites (4.9 percent), blacks (10.3 percent), Asians (4.0 percent), and Hispanics (6.7 percent). Relatively low numbers could mean slack is being soaked up by the market but it will not influence all Americans fairly until labor demand rises more.

Wages and labor supply are integrally tied together and have a long history in historical analysis. For example, a paper out of the Federal Reserve Bank of Atlanta found that wages in high-skill occupations rose dramatically while middle and lower skilled occupations stagnated (Mandelman & Zlate, 2014). Those with higher skill demands in growing industries found themselves obtaining wages raises before others.

If we break labor supply into general and specific we will find where the highest increases of wages are likely to occur.  Those who have obtained specific higher levels of skills/education in advanced industry export oriented companies will see their wages rise substantially as their market supply dwindles. Those in the middle level skill/education will see modest increase while those in low skill/education markets will be the slowest to respond. 

Wage increased are based on economic activity and meeting the needs of the labor market with employable skills. Those who have access to educational opportunities, whether they be skilled labor or degrees, will see higher wages while those who have not obtained new skills will find their wages stagnated. Before low and middle income earners see their wages increase, significant slack will need to be soaked up through increased market demand. Raising earning potential requires a level of investment in the acquisition of new skills through training, skilled trades, experience, and college education.

Mandelman, F. & Zlate, A. (2014). Offshoring, low-skilled immigration, and market polarization. Working paper series (Federal Reserve Bank of Atlanta), 28.

 

Why are American’s Quitting Their Jobs?

According to a report by the Bureau of Labor Statistics 57.5% of people who left their jobs did so under their own free will. A total of 5.03 million employees were added which boosted the hiring rate to 3.6%. At the same time 2.75 million people resigned in September with a quit rate of 2%. Make no mistake, the job market is heating up and employees are finding options that were not available to them a few years ago.

When the economy is poor and employment prospects are low employees naturally stay in their jobs for fear that they will not be successful in securing new employment. Likewise, there may be an abundance of people seeking the same position which raises the stakes when attempting to jump ship. It is often wiser to stay where you are at until things get better.

At present the amount of people seeking the same position are 2 to 1. Those are pretty good odds for people who want to beat out the competition. When those odds are 3 or 4 to 1 that makes uncertainty higher. When unemployment declines and businesses start hiring it sucks some of the slack out of the workforce creating advantages for job seekers.

Consider the low unemployment rate of 5.8% there is growing competition among companies to retain top talent. In any recovering economy usually college educated and highly technical jobs are the first to come back. These are the positions employers need to fuel their growth and development.

The people who have fewer opportunities are those in traditional middle class jobs such as manufacturing. Without a reemergence of manufacturing within the country it can be difficult for a person with moderate education and an industry based skill set to obtain better employment unless the entire industry comes back.

Job hopping is one sign of an improving economy. This means there is some flexibility within the market and realignment going on. During the recession realignment is painfully based on lay-offs but in good times realignment is more voluntary based on the opportunities of workers that want to better their position. Work environment, compensation, culture, promotion, etc… all play a factor in a person’s decision to stay or move.

http://www.bls.gov/news.release/jolts.nr0.htm

Trade Deficit Shows Need to Improve Exports

The Commerce Department stated on Tuesday that the trade gap increased in September 7.6% to $43.03. It is much larger than the estimated $38.1 billion. It is believed that an improving GDP will lend to improvements in exports but this not what happened. The results may be long-term or short-term but do reflect a need for the U.S. to adjust its policies to return to a higher exportation status unseen since a generation ago. Exportation is a solid reflector on internal capacities of a nation to meet market demands.

Much of the recent decline is associated with global economic factors much outside the control of the U.S. The biggest losses were a 6.5% decline in exports to the European Union, 3.2% to China, and 14.7% to Japan. The losses seem to reflect lower economic activity in all three regions of the globe and may simply be a factor of total consumption.  That doesn’t mean the country can’t improve its export capabilities.

Outside of a slower global economy are two major points that should be considered. 

Dollar Value: The dollar has an impact on the total cost of American made products to foreign buyers. When the dollar is cheaper American products become cheaper as well. Research supports the idea that the deflation of the dollar improves exports (Bahmani-Oskooee & Ardalani, 2006). The opposite is also true; a rise in value of the dollar makes imports cheaper and lends to increased trade deficits. 

Regional Export Specialization:  One of the reasons why I am an advocate of regional hubs is that specialization raises exportation but is not so much as to thwart adjustments into complementary products and services when the market shifts. According to Naude, Bosker, & Matthee (2010) and their analysis of exportation found that specializations increased local economic development.  

The dollar amount is difficult to adjust unless you artificially deflate its value while a global slowdown isn’t something in our control. However, ensuring that a greater allocation of international business is in the hands of American companies and worker pockets is important. This requires a level of hub based development focus to create efficiencies that lower the overall cost of production that make companies more competitive. 

When regional hubs are attracting investments, improving their infrastructure, developing the right skills in the local labor market, and generating market breakthroughs they naturally lower the cost of production and improve market relevance. The dollar may be worth more but the cost of production is lower to thwart its damaging effect. A higher dollar can be used to purchase raw materials and turn them into higher profit exports. 

http://www.bea.gov/newsreleases/international/trade/tradnewsrelease.htm

Bahmani-Oskooee, M. & Ardalani, Z. (2006). Exchange rate sensitivity of U.S. trade flows: evidence from industry data. Southern Economic Journal, 72 (3).

Naude, W. Bosker, M. & Matthee, M. (2010). Export specialization and local economic growth. World Economy, 33 (4).

Grit as a Factor in Employment and College Success

Students enter into college with lots of different hopes and dreams but not all of them finish their programs. Those who make it through despite multiple difficulties have something called grit. That grit that helps someone get through college despite multiple challenges is the same grit that employers should seek out for management positions. 

Whether one is enrolling in an undergraduate programs or was just accepted into a doctoral program grit has a factor in their projected success. Doctoral grit has been associated with GPA, hours students spent working on programs, and student overall success (Cross, 2014). Such students are fully engaged.

The ability to work on long-term projects despite the difficulties of life, challenges people face, and varying stresses is a remarkable trait. It is hard to judge someone’s grit simply by looking at them or completing a quick assessment. Grit is something tied to the very core of personality of the person and their self-belief in achieving their goals. 

Based on psychological assessment grit is associated with self-regulation, focus, and goal setting (Mangan, 2012). Those who show grit have the ability to monitor themselves for improvement, focus on what is important to them, and set appropriate goals. 

Employers sometimes gravitate to hiring from elite higher education institutions where the majority of students have educated parents, adequate finances, strong university support, and the best instructors. On the other end of the scale the world is very different in terms of opportunities and employers should be aware of higher performance when merited.

Those who achieve despite difficult odds have something in their personality beyond just hard work. Grit is not based on a person’s socio-economic background or the type of car they drive. Grit is something that separates the wheat from the shaft through trial by fire. Employers seeking employees who can gain focus, set-goals and achieve them should be given merit for overcoming difficult challenges and excelling. 

Cross, T. (2014). The gritty: grit and non-traditional doctoral student success. Journal of Educators Online, 11 (3). 

Mangan, K. (2012). Traits of the “get it done” personality: laser focus, resilience, and true grit. Chronicle of Higher Education, 58 (43).