Dealer Outlook

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Election over: What’s next for our industry?

The outcome of Tuesday’s midterms signals some big changes ahead. Or does it?  Well, if I tell you, I’d have to kill you (which means I don’t know!) However, if nothing else, the fear that both Congress and the President could continue to roll on, oblivious to the sentiment of the electorate, has been pointedly diminished. 

Above all, the thing that’s holding back recovery for our boating industry is fear. Consumers have been afraid to spend their money. Their debt has been in a nose dive for nearly two years now. They don’t even want to borrow money these days. And, even if they did, they’d find banks afraid to lend.

Banks have more than $1 trillion in excess reserves parked at the Federal Reserve because they’re afraid to lend it, experts say. A stagnant money supply has resulted. It’s left small businesses unable to get loans, order new products, bring back employees and move away from a keep-your-head-down posture.

As the same time, untold trillions in cash are reportedly being hoarded by big corporations because they’re afraid of unknown future tax and regulatory burdens, the latter already coming down like rain in a tropical storm.  So, corporations avoid hiring or calling people back to work. Thus, the circle of fear is complete.

Fortunately, all is not as it appears. Actually, there have been important economic bright spots even before the midterms. For example, the New York Times recently reported the agricultural industry is doing well, exporting more than $100 billion in food last fiscal year, the second highest year on record. There’s similar good news in the manufacturing sector. Contrary to appearances, companies have been increasing output and hiring. The Institute for Supply Management’s Factory Index of production has been rising. In August, it hit 56.3, up from 55.5 in July (over 50 signals growth.)  Caterpillar, as an example, expects to hire 9,000 this year.

More positive news: The Index of Consumer Confidence rose to 53.5 in August, reflected in a reported increase in retail sales. Moreover, a 3.4 percent increase in wages may be going a long way to reducing fear about the future. And, most notably, the talk of a possible double-dip recession has all but disappeared.

 So, if the midterm shake-up is to have a positive impact, it will be to boost an upward economic swing that’s already begun but needs a goose! It should include action on priorities like extending the Bush tax cuts for everyone as a way to stimulate business creation instead of punishing it. Add to that the elimination of “hidden” tax plans like those in the cap and trade or EPA greenhouse gas proposals. And, while repealing the entire health care debacle seems politically unrealistic, onerous provisions must be removed and viable plans to reduces health care costs to employers and workers alike must be promulgated.

What’s more, great oversight will be required as an unprecedented number of new regulations on taxes, health care, financial services and environmental issues are still to be written by agencies throughout the federal government.

Nothing will be automatic, of course. While a large group of freshman lawmakers who appear responsive to pro-business issues will arrive in Washington in January, we must expect to be engaged, along with our national associations (NMMA, MRAA, NMDA, NMBA and others), in lobbying for positive actions that directly affect our industry.

Rolling back policies that have created uncertainty and fear will be the positive result of the midterm shakeup. If that’s accomplished, economic growth will become self-sustaining as it always has been in this country and that will include our boating industry.


14 comments on “Election over: What’s next for our industry?

  1. Gary Rademaker

    Norm – there is a little-publicized legislative initiative that I believe would make a swift and major impact in our industry. It is the HOME Act, proposed by Congressman Dennis Cardoza from California’s 18th District. If passed, more than $50 BILLION dollars annually would be placed in consumers’ hands and injected into the economy…with NO COST to taxpayers. Please check out this link to the HOME Act on Congressman Cardoza’s web site I’d like to hear your opinion. I believe this is a proposal that our industry and our national associations should get behind to support its passage.

  2. Kurt Hoehne

    Yep, our economic fears started the day Obama was inaugurated. Or was it the day he was elected? It certainly had nothing to do with the economic unraveling that preceded it by a few months, brought on by the conservatives’ deregulation of the banking industry, prolonged war and tax cuts.

    Surely, Obama should have things sorted out in 22 months. Why, he should have had global warming fixed by now as well. Oh, wait, that doesn’t exist.

    And Oh won’t it be great to get back to the old health care system that was getting more affordable every day. Oh, wait, the free enterprise health care system still exists pretty much as it was..

    We all know that the deficit is a disaster and will spell the end of the US as we know it. Good thing that will be fixed. Oh, wait, even the Wall Street Journal says the new Congress makeup will ensure a bigger deficit. Apparently less tax revenue makes a deficit worse.

    At least the stock market will go up now. Since Obama took office, your $100,000 stocks are now only worth $177,000 (following the Nasdaq average). Surely that must be improved if we are to put some food in our poor children’s mouths.

    This election was not an expression of the electorate, this was skillful opposition politics. Get that erudite electorate to think about what they don’t have instead of the crisis that we’re just pulling out of. And the amazing thing is how many people step into the party line.

    Please forgive my sarcasm. I’m neither Republican nor Democrat, I just would like people to step back and see the problems as they are, not as the politicos frame them for us. We have real challenges, from competing in the changing world economy to educating our youth. Our solution? Reduce taxes and get back to good old fashioned “American Values,” whatever they are. We all need to be a little more sophisticated than that.

    The problem isn’t with who’s in office. The problem, as Mr. Schultz points out at one point, is that banks are sitting on trillions of dollars. That’s the fuel that runs the engine. I doubt that fuel will start pouring out because of some tea party.

  3. Dan

    Thank you, Kurt, for your words of wisdom. It’s amazing to me how often the facts are overlooked in any political situation. Now…. may I nominate you for political office?

  4. C. Moore

    Those dam banks LOL….It’s sophistication that got us here.. It’s educating our kids in electives rather than the basic fundimentals (Reading, writing & Math & real science) that has our youth unprepared to enter the world job markets.
    Only a fool goes to a poker game with borrowed money.
    Same is true for business….
    Banks are begging me to borrow money because they know I have the ability to repay…
    I prefer to pay cash it’s my skin in the game.. We americans have got to get back to having skin in the game of life instead of expecting someone else (banks, gov’t.) to give it to us…
    Beware the inflation coming in January…after the latest $600 billion Timmy just printed & gave to the banks(wall street) hits.
    Kurt I think you hit the nail with your head..



  6. Tory Salvia

    I was really taken aback by the blatant partisan rant of the Dealer Outlook Blog. I didn’t realize that Trade Only Today was an extension of the Republican Party. Just this morning, there was a batch of mildly positive economic news that reinforces our very slow but steady recovery. Blaming every ill under sun on President Obama or Mitch O’Connell is not what we need. Both parties need to come together for the benefit of our economy and our nation. No one party has all the answers, but either can stall our recovery by taking the partisan approach spouted in this blog. I would hope that Trade Only would be a bit more sophisticated in its future economic discussions.

  7. C. Moore

    BB&T, TD, Suntrust, BOA to name 4.
    Yes my kid did indeed gratuate with honors how did you know Larry?
    Work 12 plus hours a day 6 days a week since I was 18 & learning new things everyday.
    Everything I have ever purchased has had a minimum of 20% of my own money in it. I never said I didn’t USE banks but I never let them USE me.
    I have never purchased a new car or truck but purchased CPO’s.
    I reinvest in what I know – my businesses not other businesses that I have no ability to influence.
    Larry I honestly started with nothing. I know you might find that hard to believe but hard work does pay off. Keep working at it.
    It is, wonderful to be me, I’m very happy. But I am concerned with the I deserve it mentality that has swept over this great country.
    So there you go Larry I think I answered all your questions.
    Now please turn the caps off unless you really mean to be yelling…

  8. Blake Davis

    Larry, When one types in ALL CAPS it’s considered “yelling” on the Internet and poor manners, Right off the bat anything intelligent you had to say will be ignored. Medium IS the message as it were. I think you thought you were being sarcastic or witty, but you struck out on all points. I think you unknowingly identified the source of all your problems in your last sentence. Don’t blame the messenger for the message unless he’s the guy in your mirror causing all your problems.

  9. Arch

    KURT HOEHNE, you are certainly a spin-master. You say you are neither DEM or REPUB. That may be, but it looks like you voted for Obama and trying to defend your positions. Anybody can spin ANYTHING with some sarcasm, wit, and enough factual information to make it believable. It doesn’t mean it’s true.
    It wasn’t just conservatives that deregulated the banking industry. DEMOCRATS were just as, or in some cases even more responsible. When it comes to the real estate industry, there is no doubt DEMS/Progressives were more responsible.
    Funny how you IMPLY that Obama inherited the horrible economy. YES, he did, FROM A DEMOCRATIC CONGRESS. There is little doubt that Congress has far more influence on our economy than our President does. They have been in power for 4+ years.
    Many independent studies have been done and THE WARS HAVE NOTHING TO DO WITH THE RECESSION. And don’t forget that the DEMS voted to go to these wars as well. Obama didn’t, but we won’t ever know the consequences if we hadn’t gone on the offensive. History will be the judge, not the Keith Olbermann’s of the world.

    And if you think tax cuts contributed to the recession, you are standing in the way of history. Almost every single time tax rates have been cut, the GOV’T takes in more revenue. Research it.

    When it comes to HEALTHCARE, the bill Obama passed is going to be a nightmare. There are VERY FEW NON-MOOCHERS who would disagree. If you think it will actually come in at or under budget, you are a fool. We all know the real costs will MUCH MUCH MORE than they have said. The CBO has already revised the numbers up and will continue to over the next few years and they will STILL be way off, as the GOV’T almost always is. Almost 50% of the adults in this country DO NOT PAY TAXES (net). I’m all about helping people, but I have no interest in paying for healthcare for many of the MOOCHERS that make up the 50% that don’t pay (many of which abuse drugs, alchohol, don’t take care of themselves, are overweight, 10+ million are illegals or kids of illegals, etc).
    Not to mention the constitutionality of it, which will be adjudicated soon.

    $100,000 of stocks now worth $177,000. The problem with that comment, along with many of the others you made, you left off some important info. The $100,000 was worth around $225,000 a year earlier. Markets rise and fall and have little to do with who is in office.

    “the crisis we are just pulling out of”? Are you serious? All we have done is kicked the can down the street and borrow even more to make it until tomorrow. Instead of laying in the bed we have made, we got a room at the Hilton and have decided to stay there long term and we are paying full room rate with government credit card. Nice!

    The election was an expression of the electorate. No different than any other election. Oh wait, let me guess, IT’s RUSH LIMBAUGH and FOX NEWS fault. They brainwashed the electorate.

    You are right when you say we have challenges and mention educating our youth and global economy. I would submit to you that the DEMOCRATIC PARTY has hurt us in both of those areas. Need I even explain how the teachers unions/Dem party have insisted on status quo? There are so many absolutey PROVEN new ideas in education and Dems won’t have anything to do with it. They have even shut down Charter Schools and programs that have been incredible successful.

    You mention “OUR SOLUTION” is reducing taxes and American values. Well, yes. Both of those are important, but the #1 priority is REDUCING SPENDING. That is the line pushed by GOP more than any other, along with balancing the budget.

    The last paragraph of yours is ridiculous on many fronts. You complain about the banks hoarding money, yet it was the DEM President and DEM Congress that just bailed them out and allowed them to do that. What was that about Republican deregulation again?

    And what exactly makes you so bitter about the Tea Party? And what does the Tea Party have to do with banks sitting on trillions of dollars? That makes no sense. It’s obvious based on your comments that the Tea Party conflict with some of your beliefs. But are you threatened by their success so early in the movement ? Since you seem so critical of Republicans, why wouldn’t you welcome a party that is against the way Washington works, one that is more practical and common sensical, one that is interested in reducing spending, entitlements, and the ever intrusive involvement of Gov’t. Sure, some of their candidates werent strong (as if all Dem and GOP ones were), and the liberal press did a great job focusing on them and NOT the great ones that got elected. Looks like you also got duped into believing they are some radical right wing racist violent fraction of the GOP. IF not, why knock them?

  10. AnonymousBob

    I like your train of thought, if not for the fact is was funny and spot on, but also because I think you caused Arch to burst a vein!
    Arch claims that even though you present factual information, “it doesn’t mean it’s true”. How convenient that Arch doesn’t like facts that contradict his beliefs and calls them false. Well, Arch, where are the facts to back up ALL of your claims you post?? It’s easy to argue opinions, but you can’t have your own facts. So, please enlighten us, Oh Intelligent One. Inquiring minds want to know. And sources for your facts will be most welcome, too.
    Bring it…

  11. Kurt Hoehne

    Hello again all, especially to Arch and C Moore.

    First, I’d like to revise my characterization of what we need as sophistication. A better word is insight. Seeing problems for what they really are. And nobody has a corner on the market when it comes to insight.

    Dems and Republicans aren’t all that different. Long ago, when Reagan swept into office, I worked in a Republican (yes, really) Congressional office. I can tell you first hand that a lot of staffers, who really do the work, switch parties as easily as someone switches jobs. In their routine day to day existence, Reps and Sens are in the business of getting reelected. So, Arch, gotta agree with you the Dems were every bit as responsible for the real estate collapse, war, deficit etc.

    And, we’re not hearing much new out of either party on how to fix things. See, I truly am neither a Rep or Dem.

    Here’s another place where I can find common ground (sort of) with conservatives. I hate the health care bill that was passed. But not for the same reasons as conservatives. To me it was just delaying the time when we really have to deal with it. Health care costs are killing our economy. We spend exponentially more per person than other nations. The health care bill was a patchwork of things that complicate the system and add costs while protecting a few people currently locked out. The “Moochers,” Arch, are not the folk who work for minimum wage, and who are not provided health insurance and cannot afford the outrageous costs of insurance on the open market. The Moochers are the insurance companies, hospital boards and HMO administrators that by definition must squeeze every last cent of possible profit from a service. There are some necessary services, e.g. basic health care and basic legal representation, that should be accessible by everybody. Yes, we need national health care. We’re pretty smart: we can study what works elsewhere and what works here and combine the two. But it is going to take insight to do so, not name calling of poor people and giving a pass to highly profitable industries.

    As far as Olbermann, Limbaugh, Fox News, Stewart, Beck, and all the others both liberal and conservative, let’s not forget that theirs is a business. Business doesn’t get better for them when people sit down and methodically solve problems. Journalism should fall into that same category as health care and legal representation, areas that should be reserved for professionals who want to make a living by doing the right thing, not entering a field for unlimited profit. But that’s a cultural issue, not an economic or legal one.

    As far as the stock market going up and down (another of Arch’s points) and as far as the economy going up and down, it’s true it seems to run quite independently of who’s in the political driver’s seat. I’ll go along with that. But then it really doesn’t matter who’s in the driver’s seat and this election, and the last, are irrelevant to the economy. Again, to say that the Dems or Republicans are alone responsible for the economic situation today is, well, kind of silly. Yet, that’s the message on which campaigns (especially this last one) are run, with a sprinkling of dirt digging for added texture.

    Back to the election and Schulz’ suggestion that the electorate, which was quivering in fear, might not be so fearful now that the Republican Tea Party is in power. It seems to me that the conservative rush to the ballot box was driven by fear, not insight or a real plan to fix things.

    That makes me really afraid.

    Fear IS holding back our industry. But it’s not the fear that people who are making $200K plus might get taxed again. It’s the fear that a single hospitalization could bankrupt a family. It’s a fear that the banking industry will be unable to extend credit to my company because of highly complex derivatives or some such thing. These are the issues that have to be dealt with, and that’s a far cry from repeating the mantra that tax cuts will solve everything.

    There. Not a bit of sarcasm or name-calling.

    Rock on, folks.

  12. Arch

    KURT….for whatever it’s worth, you come across much better without the sarcasm. I appreciate your comments and agree with much of what you said in your second post. I’m not sure we need National Healthcare, but we need something and I do blame the GOP quite a bit for Obamacare since they did not FIX healthcare when they were in power.

    ANONYMOUS BOB….hey, I”M HAPPY TO SUPPLY YOU WITH WHATEVER YOU WANT. Give me one or two examples of something you want me to back up? I’ve gotten into debates with Dems/Libs/Progressives before, and they always ask the same thing, they want proof/facts. When I supply it, even in cases where it’s very black and white, they NEVER admit they are wrong and say, Arch, you are right, I’m wrong. They either stop communicating and crawl back into their hole, or they just refuse to acknowledge the data I’m giving them.
    You can easily look up you tube videos/articles regarding the mortgage crisis and DEMOCRATIC involvement there, including videos of Maxine Waters, Barney Frank, and others showing where Republicans warned Dems in congress over and over about what was going to happen. Here are a few. THere are hundreds online.
    Here is Bill Clinton blaming Dems

    Here is a video about Obamacare and the ugly truth (the funny and ironic thing here is that this exchange took place BEFORE CBO revised the figures)
    Here is where CBO revised projections on Obamacare cost.
    If you think it will come in anywhere near budget, you are truly naive. Gov’t projections on major projects/reform are almost always wrong. And typically it’s off big time….50%, 100%, 200%, etc.

    Do you actually need proof that Dems controlled congress the last 4 years.
    Do you need proof that there are over 10million illegals (most claims are that it’s higher), not to mention all the anchor babies those illegals had (should I mention how high their birthrate is compared to LEGAL Americans), and how unfair it is that LEGAL citizens are having to pay so much for services and benefits given to ILLEGALS and the children of ILLEGALS?
    Need links for those too? Please.

    Here is a link that in 2009, 47% didn’t pay taxes (net). I said close to 50%, so I think you will have to give me that one.
    The top 10% of earners pay 70% of federal income taxs, yet bottom 50% only pay 2%. How is that fair?
    The top 5% of earners make 35% of the income, yet pay 59% of the taxes. YET….Obama wants to widen the gap even more.

    So how is the truth sitting with you so far?

    The stock market has ALWAYS been cyclical and has seen enormous swings in both directions. Obama was simply voted in AFTER the market tanked. The market ALWAYS rebounds no matter who is in office. You can go to BIGCHARTS.COM and see that historical perspective yourself. But what I pointed out to Kurt, and now to you is that the $177k was worth over $200k just 2 years prior. That is FACT, just chart it. From late 2007 to late 2009, it’s a BIG V.

    Ok, regarding Education, here is proof about the DC voucher cuts.
    Just about anything that could WEAKEN TEACHERS UNIONS, cost them jobs, weaken their power, put more accountability on them, is shot down by Democrats/Progressives. That isn’t my opinion, that is fact. The Unions are NOT about what is best for the kids. It’s similar to how in bed the lawyers/legal groups are with Dems and Defense contractors for the GOP.

    It is well known and documented that when you increase taxes, it usually reduces revenue and vice versa. When it’s on sale, you buy, when it’s not, you wait. That is why Obama’s decision to go back to old tax rate and not extending Bush tax cuts is so unpopular right now. The left wants to say it will increase deficit, but the right says we are in a recession and you don’t want to raise rates in this environment, not to mention that history is on the side of the GOP on that issue.
    this one is even better.

    The only reason why our economy hasn’t tanked further is because of artificial manipulation by our Gov’t. That too is fact. Look up QE2. We are going to do it again and it’s killing the dollar, which is artificially inflated the stock market since cheaper dollars for other countries means more overseas business for US Corporations. You can’t keep pumping up a limp economy forever though. QE and a cheap dollar means we will have a price to pay. This again is POPULAR OPINION amongst most economists, not some conspiracy theory.

    Consider yourself ENLIGHTENED.

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