17 insights from our Economic Forecast Luncheon
CHRIS CONETZKEY Jan 29, 2016 | 8:25 pm
8 min read time
1,817 wordsBusiness Record Insider, Economic DevelopmentThe full Business Record newsroom was on hand for our 2016 Economic Forecast Luncheon on Thursday. There were a number of great insights shared by the panelists, way more than we could possibly write about. But we had each writer on the lookout for a handful of their own takeaways from the panelists and from talking to audience members after the event.
JOE GARDYASZ – Senior Staff Writer
What keeps Debi Durham up at night?
“What keeps me up at night? Mark my words, 2016 will be the year for mergers and acquisitions,” Debi Durham said toward the end of the discussion, addressing a question that hadn’t come up. “And how Iowa fares in that is yet to be told. We will know in very short order how we fare (in the Dow-DuPont merger deal). These are challenging and exciting times all at the same time, so that’s what we have to deal with, and you’ll be seeing more and more of those on the horizon.” Durham said she also believes more investment dollars will flow to entrepreneurial ventures. “We’re going to see more venture money in Iowa, which is a good thing, something we’ve been missing,” she said.
Overseas labor markets sharpen competition
Shifting labor costs to cheaper foreign markets is becoming more of an issue for U.S. companies, not less, as developing countries strengthen their capabilities in areas such as data analytics, said Dan Houston, CEO of Principal Financial Group Inc. “You can do an arbitrage on labor to other countries today and have upwards of 50 to 75 percent savings,” he said. “Someone might quickly say, ‘They don’t do the jobs as well,’ but they are refining their skill sets. Even with data analytics, you can have that done in India today for about 25 to 30 cents on the dollar relative to it being done here. And with communication the way it is today, it’s being done every single day. So we are, even in the services industry, being subjected to international competitiveness.”
It’s all about relationships
Adam Steen, a mortgage broker and business development officer at Liberty National Bank in Johnston, said his biggest impression from the discussion was the connectedness of Iowa. “It’s all about relationships,” Steen said. “If you’ve got a good idea and you’ve got a desire to make your idea a reality, anything’s possible.” In the past year, Steen proved that point by cultivating a number of relationships in both rural and urban Iowa to help a garage-based entrepreneur bring a turkey decoy product successfully to market in 35 states.
KENT DARR – Senior Staff Writer
Idle minds
With a panel of strong-minded individuals, there was little time for an idle mind to wander. But one did, and happened to notice that two developers and two teams of bankers left the Economic Forecast at the same time, from different areas of the large conference room and before the session ended. With all the buzz about development activity, the idle mind had to wonder about a big deal in the works. Probably a coincidence, but then again …
A possible resolution to historic tax credits controversy
The details were sketchy to nonexistent, but Iowa Economic Development Authority Director Debi Durham gave a strong endorsement to a state program that has helped finance millions of dollars of historic renovations in Des Moines, Dubuque and elsewhere in the state, but that has stalled in recent months, apparently over concerns that it could lead to a repeat of the film tax credits scandal of a few years back. Durham said the program will survive, probably under the auspices of IEDA and the Department of Cultural Affairs, which currently administers the program. Durham made the comment in response to a question for Des Moines City Councilwoman Christine Hensley, who has met several times with state officials to encourage a resolution to the controversy.
What about that federal deficit?
The big picture on the economy, that would be the macro view, is on commercial real estate broker Doug Siedenburg’s mind these days. Even though he is about as keen as they come on the Greater Des Moines and Iowa economies, he is concerned about the impact of the nagging federal budget deficit. He walked away from the luncheon praising the panel, but wishing there had a been a little more discussion about the big picture. It wasn’t just our panel that didn’t talk about the deficit, if you think about it, nobody is. Why aren’t people talking about the deficit anymore? Here’s a link to a blog on FiveThirtyEight.com that addresses that very issue. The short answer: the deficit is high by historical standards, but it has stabilized since 2013, reducing the topic’s political salience.
PERRY BEEMAN – Senior Staff Writer
Paulsen: International returns will outpace U.S.
James Paulsen, chief investment strategist for Wells Capital Management Inc., said some of the nervousness about China may be overblown, as that nation purposely sought to slow its economy while it gets its stock market going and makes other changes. It’s part of an international scene that is likely to seem stronger than the U.S. for a while. “International markets will do better than the U.S. for the rest of this recovery,” Paulsen predicted.
Hensley: There’s a lot to cheer about
After the session, I caught up with Des Moines City Councilwoman Christine Hensley. We’ve been talking about downtown development since the mid-1980s. She’s always bullish about downtown, but I’ve seldom seen her exude this level of enthusiasm. Hensley said negotiations on the former YMCA are progressing, more and more outside interests are eyeing properties around downtown, and the city is about to award a bid on the revamp of Walnut Street. “I’m feeling very positive,” Hensley said. “I think we have such great public and private partnerships. Des Moines leaders are very accessible, and we have great synergy and collaboration.”
Byers: Development queue, startups will help keep economy strong
After the panel discussion ended, Greater Des Moines Partnership CEO Jay Byers was trying to figure how he was going to get downtown from the West Des Moines Sheraton in the five minutes before his next meeting started. He graciously caught up with me when he came up for air later in the afternoon. (This is a guy who had everything from early-morning panels to the Partnership annual dinner in one week, and, oh yeah, a billion journalists and campaign staffers were in town for the caucuses.) “We are optimistic that Central Iowa’s economy will remain strong in 2016,” he said. “We continue to outpace our Midwest peers in percentage of population, job and GDP growth and expect that trend to continue. Our economic development queue looks promising, and we project another good year for commercial and residential construction across the region. We also are enthusiastic about the cutting-edge innovation happening in our world-class ag-bioscience and financial services industries and the growth potential for startups in our region.”
Paulsen: Ag prices should rise, helping manufacturing
James Paulsen, chief investment strategist for Wells Capital Management Inc., said the soft agricultural economy should start to see rising grain prices, which in turn should bring a least a modest boost in manufacturing. “We will get a pretty decent gain in agricultural prices,” he said. “I think it will feel better here in Iowa.”
Swenson: Minneapolis, Kansas City luring our talent
Associate scientist David Swenson of the Iowa State University economics department said Iowa is letting its talented youths move to Minneapolis, Kansas City, Omaha and other cities. “We have to up our game,” Swenson said. “They are better at taking our college talent than we are at attracting theirs.”
CHRIS CONETZKEY – Business Record Editor
Gas is cheaper, so, what are we doing with that savings?
More than $100 billion has been put into the pockets of consumers due to the low gas prices Principal Financial Group Inc. President & CEO Dan Houston said. People have one of three choices with what to do with the extra cash: Spend it, save it, or pay off debt. Houston said people are choosing to save or pay off debt – a good sign in his opinion.
The high potential for this new crop
During a portion of the event Iowa Economic Development Authority Director Debi Durham talked about a growing interest younger folks are showing in micro enterprises. She joked about the types of commodities that could be grown in the state, “we can grow lavender, hops, – heck, we were even having a conversation about whether we could grow hemp because we grow everything!” Interestingly enough, the president of Peoples Co., Steve Bruere, invited a marijuana farmer to preside over a session at his annual Land Investment Expo on Jan. 29, all in the name of finding another ag commodity. “Like it or not, (marijuana farming) has become more of a reality in our world,” Bruere said.
The Megyn Kelly of Des Moines
We were happy to have U.S. Congressman John Moolenaar of Michigan’s 4th district stop by for the event. But before the show got started I was introduced to John by a fellow Business Record employee as the moderator of the event. John paused for a second, then deadpanned, “So, that makes you the Megyn Kelly of Des Moines right?” Well, like the much critiqued FOX news anchor, I also rocked a new hair style … though for some reason it didn’t make quite the same stir on Twitter as it did for Kelly during the Republican debate later that night. But, hey, thanks for noticing congressman.
ANNE CAROTHERS-KAY – Managing Editor
Business is bullish on immigration
James Paulsen joked that the country’s largest generation is part of the reason our economic recovery has been “chronically disappointing.” The baby boomers, “got old and unproductive.” Perhaps not coincidentally, as boomers reach the final years of their careers, U.S. productivity has gone down. “Until we allow immigration, that’s not going to change,” he said.
Double edges of a strong dollar
All of the panelists lamented the strong dollar in a global economy, how it hurts our exports, our ability to compete with other countries and results in jobs being outsourced to countries where the work is done for 20, 30 or 40 cents on the dollar. In a global economy, these are not things Iowa business should ignore, I know, but I couldn’t help thinking to myself, “Yeah, but it’s making for a really good time for foreign travel!” Though I might need to hurry. Paulsen actually predicts that we could start to see a weakening dollar.
Durham’s predictions
It was encouraging to hear Iowa Economic Development Authority Director Debi Durham say she expects more investment and programs to develop women, who have been described as the largest emerging market in the country. She also mentioned to keep an eye out for a female specific investor initiative this year.
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