Retail Observer

RETAILOBSERVER.COM JANUARY 2017 58 U ncertainty is the bane of corporations, and in my career with Whirlpool, our goal, like most organizations, was to achieve predictable results. There is no doubt that this election cycle has been a roller coaster of doubt and confusion, and has brought heightened levels of uncertainty about our future. Since 1776, we have experienced Presidents who have had an impact on our economy and our lives, in positive and negative ways. This year, we have seen the most divisive election in U.S. history, which has created a sense of ambiguity that could be harmful to our economic progress. As I write this article just days after the election, making predictions about business activity for next year is like trying to predict if the Cubs will win the 2017 World Series. However, our economy is bigger than the President and while we like to blame everything that happens within a four-year business cycle on our Commander in Chief, economic progress usually falls within the defined boundaries of the leading economic indicators. It is the actions of the populace that normally impact our progress around consumer spending, gross domestic product and employment and thus our financial future. Adam Smith, the author of The Wealth of Nations (1776), discussed the concept of the "invisible hand," which is a metaphor he used to describe the unintended consequence and economic benefits of the individual actions of consumers. Smith's laissez-faire economic theory expresses the idea that when market decisions are made in our own self-interest, it channels socially desirable ends and leads a nation to a greater good. While this is neoclassical economics and other economists have disagreed with Smith's conclusions, it does give us some guidance in understanding what is next for America. We are a severely divided nation that has traversed a brutal election, but we share, as citizens, more in common than we do not and it is our commonalties that usually unite us and give us strength. My predictions for 2017 need to wait so that I can better understand the consequences of the 2016 election and what the outcomes mean for the economy. However, I can give you insights into our progress to-date. The U.S. labor market showed resilience in October 2016 with 161,000 new jobs created, bringing the monthly average for job creation in 2016 to 181,000 per month, enough to lower the U3 unemployment number to 4.9% . That prompted Federal Reserve Vice Chair Stanley Fischer to say, "this recovery has been and continues to be powerful in terms of one of our two main targets —employment—and it is my view that the labor market is close to full employment." With the the growing demand for labor, we had the year over year gain in wages last month rise to 2.8 percent— the best increase in nearly seven and a half years. We also had good news with consumer spending. Americans spent more than expected last October as households increased purchases of appliances and other consumer durables. The Commerce Department reported in November that spending increased 0.5% in September. Consumer spending is a critically important indicator as it makes up 73% of America's GDP. Lastly, we saw accelerated growth in Q3 GDP that helped ease the concerns we had of a near-term slowdown in the economy. Gross domestic product, defined as the amount of goods and services we produce in one year, came in at a very solid 2.9% , which beat economists' expectations of 2.5% . This is the fastest pace of growth we have seen in two years. If Adam Smith is right, the economy should be fine over the next four years as we pursue our lives in the ways Americans have always behaved. I will make some predictions in my next article but remain assured that an $18 trillion dollar economy is not easily swayed. ECONOM IC UNCERTAINTY TO BE THE RULE IN Q1 OF 2017 Joe Higgins Economic Viewpoint Joe Higgins began his career with General Electric with a degree in economics. Joe left GE and joined Whirlpool as National Director of Sales. Joe retired from Whirlpool in 2012 in a career that spanned two companies and 43 years in the appliance industry. For the past two years, Joe has been speaking at conventions, seminars and sales meetings across America. His work includes presentations on the United States economy, leadership, creating a high performance culture, healthy teams, and customer service. Visit www.q4qwithjoe.com. RO

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