The near term prospect for United States business is on the uptick. Our recovery from the recession is steady, although it is subject to months where statistics appear counter-cyclical. The United States is faring better than most developed economies, and the time to start business initiatives is today. You shouldn’t wait around; the way things look today constitutes the “new normal.”
This is the view of the panel at the September 18th meeting of the National Association of Corporate Directors/New England. Panel members were Jeffrey Immelt (CEO of General Electric), John Fish (CEO of Suffolk Construction and head of the committee to bring the 2024 Summer Olympics to Boston) and Cathy Minehan (Dean of the Simmons School of Management and former President of the Boston Federal Reserve Bank).
According to Immelt, there are still problems which the United States economy should overcome, particularly paucity of investment for small and mid-size businesses, which are the drivers of employment growth. We also need to work on training and education, protecting small businesses (we say we love them but “crush them”), infrastructure and regulatory reform.
The panel also cited the complex and over-reaching United States corporate tax system. This has led to “inversion” transactions, where American companies re-establish their home base outside of the United States to save on taxes (Immelt noted that “We’re not doing that.”). There was, however, a lack of confidence that the political deadlock would permit addressing the tax code any time soon.
One of the drivers of American manufacturing, which Immelt claims is in its best shape in thirty years, is inexpensive energy compared to our worldwide competitors.
Minehan noted that while the United States is indeed on an “upward trajectory,” one great help would be a “normalization of interest rates,” particularly in the short term; we should not be concerned with month-to-month volatility. She also noted that the United States was benefitted by our ability to attract, educate and retain young people from other countries (“thank God for immigration”), which makes the United States more resistant to an aging demographic than other developed economies. China was going to run into a problem of an aging workforce as a fallout of its “one child per family” policy.
The panel noted that we were not training people to do the jobs we need, and that we lack the technical schools to train an intelligent workforce. Education is too expensive, and there is unsustainable student debt. Industry must take a lead, also, perhaps in summer internship and apprenticeship programs.
Failure of the government to cooperate with industry to understand the growing needs for infrastructure, including roads and transportation, will stifle growth and already is causing gridlock in a variety of ways. For Massachusetts, attracting people from overseas and inducing them to work in Massachusetts outside Route 128, attracted by new infrastructure support in the rest of the State, would be a great way to build the economy and to provide affordable housing.
The panel agreed that under-employment was not just an American problem. Immelt noted that under-employment is the global issue, and that for example over 60% of Egyptian college graduates were unemployed.
In subsequent posts, I will address three additional areas discussed by the panel: the role of technology; doing business with China; and, the effort to attract the Olympics to Boston.