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The three-year economic recovery has been halting and emotionally daunting. And that's if you kept a job.
The latest anxiety is driven by a smaller-than-expected May jobs report and the annual eurozone crisis. Greece and Spain matter, but they don't drive our economic fate. We are inundated with conflicting reports on employment, consumer sentiment and economic growth. Then political pundits spin the data. At least there will be some certainty after the November elections.
Meanwhile, I'm sticking with the outlook of admittedly optimistic Jim Paulsen, a heartland economist and chief investment officer of Wells Capital Management. And chats last week with several local small-business owners busy adding clients and employees proved encouraging.
"I just think there are more parts of the story that are lending themselves to recovery," said Paulsen, who called the recovery "broadening" and "sustainable." Consider:
•The private sector has recovered half the 8.8 million jobs lost during the 2008-09 recession.
•Corporate profits are headed for a third consecutive strong year and the stock market has doubled in value since the depths of March 2009.
•A surging U.S. oil-and-gas industry, coupled with innovative technology, has cut U.S. reliance on imports and helped lower energy prices.
•Housing is starting to contribute to the economy again.
"Although the pace of economic growth remains subdued, its character is much healthier compared to earlier in this recovery," Paulsen said. "The vulnerability of this recovery to outside shocks and fears should diminish."
Paulsen expects economic growth to rise from slightly south of 2 percent now to a respectable 3 percent by year-end. The two-year recovery in corporate profits in 2010 and 2011 occurred with little hiring because big companies, as they have in the last three recessions, apply technology and otherwise increase productivity to earn more profit per surviving employee.
Those big companies have started to hire. U.S. employers in May added only 69,000 jobs, compared with an average of 200,000-plus in the preceding several months. Yet last week, the ManpowerGroup posted a positive hiring outlook for the third quarter based on their latest employer survey.
Minnesota's 350 community banks are increasing profits. Paulsen sees more credit heading to expanding small business. Consumers have shed debt. Higher retail spending has been helped by stabilizing housing values and gains consumers see in their retirement accounts.
Home equity in the first quarter rose to $6.7 trillion, the highest level since 2008. Mortgage rates are at record lows. May was the third straight month of year-over-year price gains, according to the Minneapolis Area Association of Realtors.
Still, it's hard to shake the aftershocks of the Great Recession. So I turned to three Minnesota entrepreneurs who are too busy running their firms to brood over headlines.
'Stronger core business'
In early 2009, CEO David Hartwell of New Hope-based Bellcomb scrubbed plans to cut workers and instead put idle laborers into training, plant-improvement and time-off-to-volunteer duties. Bellcomb, which makes lightweight, heavy-duty paneling for building and transportation customers, was poised for recovery.
"We have a stronger core business than in 2009 and we're better diversified," said Hartwell, who opened a second plant last year. "How busy our design-and-engineering group is is one way to understand our future. They are struggling to keep up. I would say the economy is doing all right and we're benefiting."
Hartwell expects to post $25 million-plus in sales this year and has increased employment by 20 jobs to more than 120 workers over the last year.
In October 2007, Brad Arthur, a 23-year veteran of the IT-placement business, launched his latest company, True Source, with one other employee.
"I painted houses and loaded trucks in predawn hours to keep a business going during the 2001-02 recession," Arthur recalled. "I don't see any option other than optimism. I've been through recessions and I've been down, but I just focused this time on bringing in business."
That's how you survive lean times. Today Arthur employs about 75 IT contractors and placement professionals and projects record revenue of $10 million this year.
Richard Murphy, CEO of family-owned Murphy Warehouse, recently spent several million bucks to buy and start renovation of the company's 11th facility, an Eagan warehouse that spans six football fields. It will be the latest "logistic campus," including truck docks and a new rail spur that will run indoors through the plant and serve construction-material manufacturers.
"I'll be honest, the economy is still scary," said Murphy, who is also an architect. He converts each facility into showcases for money-saving energy and water conservation, with landscaped grounds featuring native plants watered by roof runoff.
Murphy also is one of Minnesota's top generators of solar energy with huge, made-in-Minnesota rooftop arrays atop his facilities.
"We've held the line on expenses, but we've also added 10 people [to 175] over the last year," he said. "Our business is growing."
These guys deserve better from Washington. The warring parties eventually must compromise on long-term debt reduction. A bargain would inspire confidence in the citizenry and markets, and cement a long-term recovery.
Neal St. Anthony • 612-673-7144 • email@example.com