Are We Destined to Become Greece??

Yesterday voters in HARDI's home state of Ohio voted to overturn a key piece of our governor's budget that had erased a staggering $8 billion state deficit created by massive overspending and erosion of the state's tax base over the last several years.  While the headlines will focus on yesterday's vote being a big win for big labor since the vote preserved collective bargaining rights for state employees, what I fear will be overlooked is the broader issue of exactly how committed ALL Ohioans are to fixing our financial woes.  Further, while the Constitutionally-questionable "Super Committee" deliberates in an attempt to trim less than a tenth of the absolutely obscene nearly $15 TRILLION federal deficit, the apparent lack of seriousness here in Ohio to address a state deficit that's less than what the federal government currently spends EVERY DAY hardly instills confidence that we will be able to prevent a Greece-like financial meltdown.  As representatives of a segment of our industry that perhaps relies on credit availability and affordability more so than anyone else, it is certainly troubling to watch our state choose short-term benefits (yet again) over long-term viability.  Keep an eye out, you may start seeing HARDI materials coming from more fiscally sound states like Texas or even our next-door neighbor Indiana...

Debt Deal, Market Crashes, and Fundamentals

HARDI's economists at ITR provided us with this analysis of the recent "debt deal":

A DONE DEAL?
The Congress passed, and the President signed, a debt reduction deal that the Congress, President, and American people don’t like (by a majority of over 90% according to a poll on Fox News). If you listened to Monday’s Make Your Move on voiceamerica.com, you heard Talbot, Brian and I (Alan) discussing this. I’ll save the various comments for those interested in downloading the program and give you a single point of view.

The Debt Deal will do nothing to change our forecast for the next few years, 2014, 2019 or our projection of a Great Depression in the 2030s. The agreed-to $2.1 trillion reduction (if it actually happens) is too small to matter. We will still add about $10 trillion in debt between now and 2020, and that debt burden has the potential to crush taxpayers and the US Dollar.

Despite such shortcomings, there is a ray of sunshine. The needle moved a fraction of an inch toward a financial reality that might be called rational. It was hard fought and nobody “won” (US debt reached 100% of GDP after the debt ceiling was raised); but perhaps, just perhaps, we have seen the beginning of a potential movement toward financial realism in this country. Let’s hope so.

Yesterday's tanking of the stock market is raising new fears about our economy. Today's slightly better-than-expected jobs numbers and a largely symbolic drop in the unemployment rate to 9.1% has only slowed the rate of the Dow's contraction thus far. Here's a good WSJ video explaining why the debt deal led to a sell-off. That being said, I find it necessary to remind business leaders of our economists' continued conviction that basic industrial and broader economic fundamentals do not support a "double-dip" forecast. Further, the WSJ published a piece today recommending patience at the least (online subscription req'd) and ITR recommended at the beginning of the year aggressiveness with regards to real-estate and other large/long-term expenditures such as leases, vehicles, and infrastructure or equipment upgrades because money is still cheap and corporate earnings, profits, and cash continues to be solid. Be sure you're taking in all the data, and the advice of the most proven experts before making any knee-jerk reactions.

LIFO Under Heavy Attack from Obama Administration

As the United States continues to move closer to its $14.3 Trillion debt ceiling in August, negotiations between Congressional leaders and the White House have broken down over the Obama Administration's insistence on increasing revenue through tax increases, including a repeal of LIFO and a tax on LIFO reserves. This proposal represents a devastating and unprecedented retroactive tax on businesses and could cause price increases and in some cases force businesses to shut their doors.

With just over a month left in debt limit negotiations, it is important for HARDI members to act now and let our leaders know how devastating the Obama Administration's proposed LIFO repeal would be to manufacturers, suppliers and distributors. All HARDI members are encouraged to take a few minutes and contact the leaders listed below and tell them how vital LIFO is to your business and our industry.

Urge These Elected Officials to Oppose a LIFO Repeal

President Obama : (202) 456-1111
Senator Max Baucus: (202) 224-2651
Rep. Chris Van Hollen: (202) 225-5341

Thank These Leaders for Standing up for LIFO
Speaker of the House John Boehner: (202) 225-0600
Senator Jon Kyl: (202) 224-4521
Majority Leader Eric Cantor: (202) 225-4000

HARDI Economist Discusses Japan Disaster Implications

HARDI Chief Economist, Alan Beaulieu of the Institute for Trend Research, issued a brief today to HARDI member companies outlining the economic implications of the terrible disaster in Japan. Beaulieu outlines how the disaster will have significant impact on some aspects of the economy, but it should not have a major impact on consumer demand in the US. HARDI members who did not receive this brief should contact services@hardinet.org. Non-member companies who would like to receive this kind of information in the future should contact membership@hardinet.org.

Home Performance w/ ENERGY STAR Moving to DOE

The Home Performance with ENERGY STAR program for energy efficient whole-home residential retrofits that has resided at U.S. EPA since its inception is moving to U.S. DOE. As EPA funding come increasingly under attack by Congress, it is believed the move is being made so more resources will be available to the growing program. Home Performance with ENERGY STAR is hosting a stakeholder meeting on April 13 in Washington, DC to review the move and transition in more detail with stakeholders. For the formal release about the transition, click here.

Small Biz Lending Stabilizing, Opportunity for 2011 Growth

For Release: February 10, 2011

Contact: Patrick Morris (202) 205-6941

patrick.morris@sba.gov

Small Firm Lending, 2009-2010: Harbingers of Growth

WASHINGTON, D.C. –Lending to small firms by U.S. financial institutions continued to decline, but began to stabilize in some loan size categories over the 2009-2010 period. This is according to the Office of Advocacy’s latest edition of Small Business Lending in the United States, released today. The study finds that small business lending dropped by 6.2 percent, less than the 8.9 percent drop experienced in large firm lending over the 2009-2010 period. GDP has turned upward, and business lending may follow the pattern of other recessions, in which commercial and industrial lending grew only after recovery was well under way.

“Businesses and lenders continued to exercise caution in borrowing and lending through 2009-2010,” said Chief Counsel for Advocacy Winslow Sargeant. “As the economy improves, this study, through its state-by-state display of lender performance, can help both small business borrowers and lending institutions see where small firms are beginning to find the capital they need.”

The study finds that lending in the smallest business loans under $100,000 began to stabilize in 2009-2010—the total was down by 1 percent, compared with a 5.5 percent drop in 2008-2009, and real estate loans accounted for the entire decline.

Small Business Lending in the United States, 2009-2010, uses data reported by financial institutions to their regulatory agencies to compile state-by-state rankings of these institutions with respect to their small business lending. Two types of reports are used: Consolidated Reports of Condition and Income (Call Reports) and Community Reinvestment Act (CRA) reports. (The rankings are unrelated to banks’ status with respect to Small Business Administration lending programs.)

The Office of Advocacy of the U.S. Small Business Administration (SBA) is an independent voice for small business within the federal government. The presidentially appointed Chief Counsel for Advocacy advances the views, concerns, and interests of small business before Congress, the White House, federal agencies, federal courts, and state policymakers. For more information, visit www.sba.gov/advo, or call (202) 205-6533.

NLRB Now Going to Court to Defeat Secret Ballots

As reported in this NYT article, the National Labor Relations Board (NLRB) is threatening to sue four states that recently passed ballot measures requiring secret ballot votes by workforces when deciding to unionize. Raising the federal agency's activism to new heights, there can be no doubt to the intent of the NLRB to completely railroad overwhelming public sentiment in their efforts to force unions down every employers throat...even if the majority of those workforces aren't interested. Buckle up, 2011 is going to be a bumpy labor ride.

Distributors' November Sales Strong, but 2011 Challenges Loom

"The latest numbers from HARDI distributors is very encouraging, however a word of caution is worthwhile given the outlook for housing, end of the [full] tax credit, and the outlook for the commercial industry," said HARDI Chief Economist, Alan Beaulieu. "Banks are beginning to lend more commercially but housing will be an ongoing lending issue. We would suggest that too much not be read into the numbers. A straight-line projection at this point could be disastrous."

See the full release here. HARDI will be releasing a down-graded forecast for Q1 2011 next week and hosting a webinar with Beaulieu on January 18 exclusively for HARDI members. Go to www.hardinet.org for more information.

US Chamber: Worst Jobs Bill Yet

Guess it's safe to say the US Chamber is not a big fan of the small biz bill that got signed into law today: http://www.chamberpost.com/2010/09/this-could-be-the-worst-jobs-bill-yet.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Chamberpost+%28The+ChamberPost%29&utm_content=Google+Feedfetcher

Supporters of Healthcare Bill Forced to Retool Message

Public opinion of the healthcare reform bill enacted earlier this year continues to rise in opposition, a dangerous prospect for its proponents as the mid-term elections approach. This Politico piece summarizes a host of new messaging directives to its supporters designed to try to mitigate negative sentiment towards the bill. What the article fails to point out is that there is no strategy for defending and promoting a bill that was misrepresented and disingenuous from the start. Good luck convincing Americans that even though it walks like a duck and talks like a duck, it's actually a golden goose.

US Chamber Sends 1099 Signatures Against 1099 Rule To Congress

The U.S. Chamber of Commerce is turning up the heat on Congress to repeal the rather insane 1099 provision that was passed into law as part of the healthcare reform bill earlier this year. Check out some of the testimonials from Chamber members about what the requirement would do to their businesses.

EPA Authority to Regulate GHGs Remains Under Attack

Despite initial defeat in the Senate earlier this year to pass a resolution prohibiting the EPA from regulating greenhouse gases, opposition to EPA's perceived authority to regulate these gases after the 2009 Supreme Court decision declaring greenhouse gases as pollutants is mounting. Success of this opposition would prevent the EPA from writing new regulations intended to curb greenhouse gas emissions, potentially including the use of hydro carbon refrigerants.

Great Commentary by ACCA on 1099 Fiasco

This excellent blog post by ACCA's Charlie McCrudden details the ridiculous-ness of party politics that prevented a nonsensical, unrelated provision in the healthcare bill that will cost law-abiding businesses millions if not billions of dollars from being repealed yesterday.

GM First to Announce HFO-1234yf Plans

Thanks to member CD Jones for forwarding: GM vehicles will use low-GWP alternative refrigerant, HFO-1234yf in most US vehicles starting in 2013. Here's the full release.

White House to Let Some Tax Cuts Expire

Treasury Secretary Geithner said today that the Administration plans to allow the Bush tax cuts for the wealthiest Americans to expire at the end of the year and reiterated their intent to extend the same cuts for low and middle-class taxpayers. This was reiterated by House Speaker, Nancy Pelosi, earlier in the day. Despite growing concerns that the economy might be unable to sustain any tax increases, it's looking more certain individuals and small businesses filing as individuals earning over $200k/year (and families earning >$250k) need to start reaching deeper into their pockets soon.

Responding to questions about potential small business pushback to the tax hike, Geithner said, "Business always wants their taxes lower and always wants to live with less regulation," adding that U.S. firms are "doing very well…competing around the world."

HARDI Joins Workplace Safety Coalition, Opposition to OSHA Changes

HARDI has joined the Coalition for Workplace Safety, www.workingforsafety.com, and is joining in its opposition to H.R. 5663, the “Minor Safety and Health Act of 2010”. In this coalition letter sent to committee members Tuesday afternoon, opposition is raised to four specific provisions of the bill which would:

• Expand and strengthen employees’ OSHA compliance whistle blowing abilities with no corresponding increase in burdens of proof
• Mandatory and immediate abatement by employers if charged with a violation without due process
• Dramatically increase civil and criminal penalties on employers
• Establish “Pre-Final Order Interest Penalties” which would charge employers interest on their penalties while challenging a citation

If the bill clears committee today with these dangerous changes to OSHA regulations in it, HARDI will issue a call to action urging all member employers to urge Congress to either strip these provisions or defeat the bill in its entirety.

Opposition to Climate Change Legislation is Apparently All Semantics

“Cap and trade has certainly been demonized,” said Sen. Ben Cardin (D-Md.). “I think that’s unfortunate. ... So we’ll just call it something different.”

This Politico piece describes the belief by many climate change legislation proponents that today's strong opposition to the concept of economy-wide emission controls is based largely on misunderstanding and mischaracterizations of the Lieberman-Warner, Waxman-Markey, Kerry-Lieberman -like "cap-and-trade" proposals.

Rhetoric Will Not Pass a Climate/Energy Bill This Year

Despite tough talk from the Administration and Senator Reid about a commitment to passing "comprehensive climate legislation" after the July 4 recess, political realities are fighting back hard as outlined in this Politico piece. While a lean, energy-only bill could almost certainly pass when the Senate reconvenes, it seems inevitable that leadership will be unable to keep themselves from loading it down with controversial oil-related or carbon policies which seem highly likely to submarine any bill regardless of what it's attached to.

Senate Dems Reenergized on Climate Legislation

This NYT article captures the energy of a reinvigorated Democratic Senate caucus now seemingly determined to bring comprehensive climate/energy legislation to the chamber's floor this summer. While the enthusiasm might be there, there is little certainty that the necessary support from within their own party is politically feasible. How exactly do you craft legislation that punishes oil companies while still enabling them to prop up the local economies of so many coastal states?

Ballot Initiative to Suspend CA's Global Warming Law Added

A measure that would suspend AB 32, California’s landmark 2006 climate law, has qualified for the November ballot. The “California Jobs Initiative” secured more than 800,000 signatures, nearly twice as many needed to bring the measure before voters. If passed, it would halt enforcement of AB 32 until unemployment in the state, now over 12%, drops to 5.5% for at least a year. Under AB 32, California is setting limits on greenhouse gas emissions from automobiles, oil refineries and other industries, and will probably require that a third of the state’s electricity come from renewable sources by 2020. Supporters say it has spurred a large market for solar, wind and other clean energy sources. But backers of the ballot measure, whose six-month, $3 million campaign was largely funded by Texas oil giants Valero Energy Inc. and Tesoro Corp., who both operate refineries in California, describe the climate law as an “energy tax” that slows job growth and burdens consumers.