As the men’s basketball NCAA tournament (otherwise referred to as March Madness) heats up, hearts and brackets are being crushed around the country. This year, our own office is participating in a friendly March Madness Bracket challenge. Truth be told, I have never been much of a fan of college basketball and this is the first time that I’ve even filled out a bracket. As a result, I’ve been surprisingly interested in the games and outcomes this year. This got me thinking about the overall impact of March Madness, not only our behavior, but our economy as well. According to the Daily Beast, the economic impact of March Madness is pretty significant. In fact, they estimate that the NCAA tournament generates spending that is equal to Iceland’s GDP. They’ve even put together a neat info-graphic to explain the economic activity.
However, not all March Madness related activities are exactly economically beneficial—particularly for employers. The tournament schedule—consisting of 67 games over 20 days—has a pretty aggressive timeline. Many of the games are actually played during the workday and can be streamed on computers, phones and tablets.
If you are streaming through NCAA March Madness on Demand there is even a “Boss Button” that will conveniently turn your screen into a spreadsheet or email with just one click. You can probably see where this is going. According to a survey by MSN, 86 percent of employees said they planned to follow some of the tournament while at the office, which doesn’t exactly lend itself to productivity gains at work. Actually, one study estimates that it amounts to $192 million in lost productivity. That’s not to say that our office participating in March Madness activities is purely detrimental to our office. According to some experts, having employees engaged in cheering on teams and increasing their office chatter through friendly pools can boost morale and teamwork. Heck, if the President of the United States has time to fill out a bracket, I think we can all be justified to take a few minutes out of our day to fill out our own, talk smack to our coworkers and continue to contribute to the March Madness economic engine.
At DECO, we are well aware of the significance of business incubators in supporting small business start-ups. Our own incubator is a great source of support and guidance for a variety of companies. As it stands, small businesses encompass 99% of all firms. They are job creators and contribute to the country’s economic growth. Supporting and stimulating the creation of new businesses is necessary to stabilize and improve the economy. Business Incubators nurture small businesses owners and entrepreneurs by providing them with all resources they need to start a business and become successful. While many people have viable ideas for a business, the majority never take that leap because they do not know where to start. Additionally, those who own small businesses usually cannot afford to invest large amounts of money to expand their businesses. That is where business incubators come in. For an affordable membership fee, they offer office space, employees, exposure through networking events, and expert advice on every area of a business–legal, financial, marketing, etc.
Last year, we had the privilege of working with the Emerging Technology Center (a non-profit business incubator) based in Baltimore City. Through this partnership, we were able to work with a few of their companies developing market studies. A market study (or analysis) tends to look at specific characteristics, demographics and trends in a target market. They can also help project current and future demand of the company’s product or service and gather information about competitors. This type of analysis is also important because it can allow business owners to estimate how much profit they can generate.
One of the clients that we were fortunate enough to work with was a company that developed a platform for providing online music lessons. As a former high school band member and a lover of music, I found their product very interesting and exciting. The main idea behind their innovative service was not only to give individuals a platform to participate in music education but to also act as a link between professional musicians and their fans. Since our time working with this company, they have successfully launched their website. You can read more about their product here. Not only that but they have also developed a huge following on their Facebook page. If you have ever been interested in learning how to play an instrument (and thought you didn’t have the time) or would like to improve your skills with professional musicians, you should definitely check them out!
The holiday season kicks off with Black Friday and this year U.S. retail sales during Thanksgiving weekend climbed 16 percent as shoppers flocked to stores earlier and spent more, according to the National Retail Federation (NRF). NRF reported that sales totaled $52.4 billion, and the average shopper spent $398.62 (up from $365.34 a year earlier). According to ShopperTrak—a firm which tallies retail and mall foot-traffic—this year marked the highest year-over-year gain for Black Friday activity since the 8.3 percent increase between 2007 and 2006.
If consumers are in fact a little less cautious in their spending this year it bodes well for many sectors of our economy. Retailers are feeling optimistic that a combination of strong promotions and pent up demand will help drive sales throughout the holiday season. NRF President and CEO, Matthew Shay agrees that the retail industry is in a better position this year than it was in 2008 and 2009. Increased confidence on the part of the retail industry is a positive sign for a gloomy employment situation. According to NRF, retailers are expected to hire between 480,000 and 500,000 seasonal workers this holiday season. During this time, retail stores and delivery companies hire more staff to help deal with the deluge of holiday shopping and shipping. Even resorts, hotels and restaurants hire additional staff to get extra help during the season.
Although these jobs are generally short-term and are relatively low-paying, there’s always a chance that some of those workers could secure long-term jobs in the future. Even during temporary employment stints, employers have the opportunity to identify workers they want to hire when the economy allows them. In addition, seasonal employment might give an individual experience and keep them relevant in the workforce. During these tough economic times, a seasonal job could keep a paycheck coming—at least temporarily. For those who are interested in turning a seasonal job into something more permanent, the opportunity may be there. A temporary gig could give an individual a chance to highlight their skill sets and work ethic which will set them apart from other candidates in the future.
Aside from the economic outlook for the year, this year’s conference focused on the implications of the 2010 Census Data. Department of Planning Secretary Richard Hall and economist Mark Goldstein gave a thorough review of the data as it pertains to Maryland and its jurisdictions. Highlights included the significant increase in the population of people 55 and over and the growing Hispanic population in the state (percent change of 106.5 percent since 2000).
For the rest of the event, experts from many different sectors of the economy discussed the impact of the data on matters such as government services, the business community, workforce development and higher education. View photos from the entire conference.
In particular, they discussed the challenges of a changing demographic profile on their particular area of expertise. Some of the challenges discussed included the need to cater to different languages and cultural customs, an aging population and the increased demand for higher education (and the challenges students face in financing that education). I thought the Conference provided attendees with many significant take-aways and nuggets of information. All the material presented and the discussions that took place will be important in preparing for the challenges the state will face as a result of its changing demographics and growing population.
It’s always incredibly fun and rewarding working on the preparation for the Conference and I’m already looking forward to developing the theme for next year’s event. Hope to see there!
It’s a busy time here at RESI as preparations for the November 9thEconomic Outlook Conference get underway. This conference is particularly exciting for us since it will be the first time since 1999 that it is hosted on campus. We are really looking to hosting the event this year and taking advantage of the newest building on campus – the West Village Commons building. Implications of the 2010 Census Data will be the central focus of the day with a variety of experts weighing in on the impact of the data on matters such as government services, the business community, workforce development and higher education. Looking forward to seeing you there!
The hottest news story these days is the August 2nd deadline to raise the debt ceiling. The deadline has been set by the Treasury department because after this date, it cannot guarantee payment of all the government’s billions of dollars in monthly obligations. In other words, if the amount that the U.S. is allowed to borrow is not increased, the nation will not be able to pay its bills. To put things into perspective, the current debt limit (or ceiling) is set at 14.3 trillion dollars. We actually hit that limit earlier this year and are currently relying on temporary measures to get around this technicality. If the U.S. is not able to borrow more money, it will have to choose which obligations to pay. The list of obligations is long and includes things such as Social Security benefits, interest payments on the national debt, Medicaid and Medicare payments, unemployment benefits as well as federal worker and military salaries. As you can imagine, trying to decide what is the priority in that list is extremely difficult.
The possibility of the nation defaulting on payments has not gone unnoticed. Moody’s Investors Service—the credit rating agency—is threatening to reduce the U.S. government’s Aaa bond rating if the debt ceiling is not raised and the nation defaults on its obligations. Nobody can really foresee what the impact of a credit rating downgrade would mean for the economy. Some speculate that the downgrade would have very little impact as much of the U.S. debt is held by pension funds and central banks that are not heavily influenced by rating agencies. On the other hand, others agree that a downgrade could mean a weaker dollar and higher interest rates which could spell trouble for the fragile economy.
Although dealing with the possibility of default is urgent, what is more important is dealing with the long-term problem of the national debt (which is why we need to borrow in the first place). Just like households have had to make difficult decisions regarding their spending and debt over the last couple of years, the same thing must happen at the government level. Making the process even more problematic, the government is trying to make difficult choices amid a tight and looming deadline. Currently, there are two plans to raise the debt limit and cut the deficit: one plan has been devised by the Republican House Majority Leader John Boehner and one from Democratic Senate Majority Leader Harry Reid. Several very daunting hurdles remain for both plans, but as of last night, Speaker John Boehner’s plan seemed to be nearing the number of votes necessary to pass the House (217). If it does pass, the hard part will not be over. The most challenging part will begin once the bill enters the Senate and encounters Senate Majority Harry Reid’s competing plan.
Attention Collegegraduates…tell your parents you are not moving back home! With the spring semester coming to an end across the nation, a number of college students will soon be stepping out into the real world. Undoubtedly, recent grads are feeling nervous entering a job market that was battered during the Great Recession. However, unlike the last four years, students have a reason to be optimistic. According to the Executive Director of National Association of College and Employers (NACE), the job market for new college graduates is gaining momentum. For instance, employers are planning to hire 19.3 percent more new college graduates—with a starting average salary of $50,462—this year compared to the same time a year ago. This is by far one of the best spring outlooks since 2007, when employers increased hiring of new college graduates by 19.2 percent.
Also, don’t forget that possible job prospects could be sitting right under your nose. If you are currently an intern at a company, it might be a good idea to ask for a full-time promotion. According to a survey completed by NACE, employers recruited more than half of their interns to full-time positions. This marks the highest rate of intern-to-staff hiring in a decade.
TU students preparing for commencement next week!
Around Maryland, job fairs and job prospects are also starting to pick up speed. According to an article by the Baltimore Sun, Loyola University and John Hopkins University have both seen an increase in employer interest for career fairs. In fact, a record number of 130 employers attended Loyola’s spring career fair. At Johns Hopkins, they have also seen an increase in employer participation at their own career fairs as well as on-campus interviews.
While job prospects may be brighter, we must also recognize that the economy is still fragile and your personal job market outlook also depends greatly on your major. According to the president of CareerBuilder.com, in-demand majors include information technology, sales, finance and accounting – to name a few. I would go out on a limb and say that economics majors are probably not doing too bad themselves. After all, it’s a degreethat can be tailored to a number of positions and jobs titles. Regardless of your degree of choice, here’s hoping this year is brighter for all 2011 graduates!
The rising cost of oil and gas prices seems to be on everyone’s mind these days. How can it not be when every time you go to the pump prices are slowly creeping upwards? Higher gas prices hurt us in many different ways.
Have you had sticker shock at the grocery store lately? Higher gas prices mean higher grocery bills since food producers and distributors have to bear the increased costs of transporting goods across the country.
Tried booking a vacation recently? Airlines, taxis and even cruises all pass on the higher cost of fuel to the consumers.
Even your home renovations are not safe! For example, nylon carpets are petroleum based and carpet packing is closely tied to the price of oil. Some of the increased costs of raw materials for carpet manufacturers are inevitable passed on the consumer.
Higher oil prices also have political ramifications. As gasoline prices keep increasing, the administration faces pressure to expand domestic oil and gas production and reduce our reliance on imported oil.
Photo Credit: treehugger.com
Higher gas prices also mean a change in behavior. We can’t be sure just how high gas prices will get, but there are some predictions about what the price would have to be in order for fundamental changes in consumer purchases, driving trends, car buying behavior and mass transportation use. A new report from the American Public Transportation Association finds that
$4 per-gallon gas prices could result in an increase of 670 million public transit passenger trips.
If gas prices increase to $5 a gallon, that figure grows to an additional 1.5 billion passenger trips.
Economists tend to agree that increased gas prices generally only have a short-term impact on our behavior (remember the increased demand for hybrids back in 2008?). There would need to be a prolonged period of high gas prices—some estimate more than six months—to really see a significant change in the behavior of Americans.
Experts disagree about exactly how high gas prices need to be for consumers to begin to significantly alter their demand for oil. For example, Exxon Mobil Corp. CEO Rex Tillerson said Americans started cutting back in 2008 when gasoline hit $4.00 per gallon. This time around, analysts predict that the threshold is somewhere between $3.50 and $4.50. A recent report by the Energy Information Administration (EIA) suggests that American motorists are not significantly cutting back demand in the face of higher prices at the pump. According to the report, the U.S. consumed an average of 9.1 million barrels per day of gasoline, up 1.2 percent from the same time period last year. As of this week, the current national average is standing at about $3.548, just at the peak of the bottom of that threshold. So tell me, have higher gas prices significantly impacted your behavior yet?
It’s a new year and a chance for us to present our yearly outlook for the economy. The Regional Economic Studies Institute (RESI) hosted its 14th annual Economic Outlook Conference on February 16, 2011 at the BWI Hilton Hotel. As in years past, the conference provided a platform to present RESI’s economic overview and forecast. The theme for this year’s conference was Are We There Yet? The phrase—commonly used by kids during long car trips—highlighted the question mark surrounding the economic recovery and our eagerness to finally bounce back from the woes that have afflicted over the last three years.
There are many indicators that help us gauge whether the economy is back on track and while many continue to show signs of distress (i.e. the labor market) the road ahead is looking a lot brighter than it was a year ago. While we may not be “there” just yet, at least we know that we are not headed in the opposite direction anymore. If you are interested in seeing the presentation and getting a little more detail please see this link.
As I indicated during my last post, this year, RESI participated in a crowd-sourcing activity that involved getting feedback from attendees regarding what they would do if they had power over fiscal, monetary and housing policies. The top answers submitted by attendees were revealed family feud style. In my opinion, it was a great opportunity to learn about what people feel are the best ways to tackle the significant challenges that we are facing.
In addition to DECO staff, the program was composed of several other distinguished guests. For instance, Robert Hannon, President and CEO of Anne Arundel Economic Development Corporation welcomed us to Anne Arundel County with some facts and jokes. Following the outlook presentation, Kathleen Snyder, President and CEO of the Maryland Chamber of Commerce gave us an overview of this year’s legislative session and the bills that the Chamber was supporting and opposing. Last but not least, David Beck, Senior Vice President and Regional Executive and Robert Carpenter, Lead Financial Economist both from the Federal Reserve Bank of Richmond gave a very educational presentation about the Reserve’s dual mandate of promoting price stability and full employment. They began their segment by giving a broad overview of the Reserve’s policy options and provided data and graphs to illustrate how the Fed’s balance sheet has evolved since the beginning of the recession.
While I thoroughly enjoyed all the speakers that day, my favorite people that day were a group of extremely bright students. As a special treat, we had several members of an AP Economics course from Arundel High School in attendance. As someone who cares about economics education, I was delighted to see a group of students who seemed so genuinely interested in the presentations and eager to ask eloquent and thought-provoking questions. I can only hope that we’ll be seeing these young people joining the ranks of economists in the near future!
To give us your opinion! Have you ever fantasized about what policies you would put in place in order to get the economy rolling again? No?! Perhaps it’s something that only we economists like to do in our spare time. I know I have plenty of ideas and suggestions.
Of course, it’s easy to be an armchair quarterback when it comes to difficult decisions but I think having an open dialogue where ideas and policies are challenged and discussed is extremely important. In order for policies to have a shot at being successful, they should not be formed in a vacuum far from the people who must deal with the repercussions on a daily basis.
As part of our Economic Outlook Conference this year, we are asking your opinion and we really want to hear it! You know what they say – sharing is caring. When you register for the conference, please take a few minutes to fill out three brief questions. Your answers will be gathered and shared during the conference in a fun way (hint: it will involve audience participation). Here are the questions as they appear on our conference page:
If you were in charge, what policies/programs/legislation would you put in place to lower unemployment?
If you were in charge what policies/programs/legislation would you put in place to lower the deficit?
How would you address the challenges facing the real estate market from underwater mortgages to the shadow inventory of homes?”
Even if you can’t attend this year’s conference (which is unfortunate) we are still seeking your input You can submit your responses right away—HERE!
Check out what some local experts “would do” if they were in charge.
Hope to see you all at the Economic Outlook Conference on February 16th!
Posted by Raquel Frye 
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Bobbie Laur
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