Economist sees winners, struggles in 2011

Think six months ahead. You'll be mowing the yard rather than shoveling the driveway. Conversations with your small-business peers will be — what?

“I think small businesses will be happy,” answers economist Adolfo Laurenti. “They'll be looking back at 2009-10 and breathe a big sigh of relief. They'll be thinking, ‘Wow! We made it.'”

Some of the positives will come from “a change in psychology, an increase in confidence” that Laurenti says will include a realization that at least a few of the high-profile issues that have captured headlines aren't so tough. Businesses, Laurenti says, will discover that the “health care provisions are not so punitive. ‘The new law may not be ideal, but I can adapt.'

“And many will feel reassured by the tax bill,” seeing it as an indication that the Obama administration may not be as anti-business as many believe.

Nonetheless, “The economic situation will not be as good as it might be,” cautions Laurenti, deputy chief economist at Chicago-based Mesirow Financial. “We'll hear very conflicting stories. There will be winners. There won't necessarily be losers, but some businesses still will be struggling.

“There will be a big divide. Small businesses in the B2B sector — OEMs, autos, manufacturing, export — will be doing fine.”

Manufacturing? The ability of U.S. companies to add value to the process has become key, Laurenti says. “We talk about the decline in manufacturing, and employment is down,” he continues. “But the value added (by U.S. companies in the process) is at an all-time high.

“There's a surge of companies trying to buy smaller U.S. companies for their technological expertise.”

Export? “The number one story is export,” Laurenti says. “There's some good growth in Asia, but there's growth in other parts of the world, too: Latin America. Canada. Australia. They are not necessarily big markets, but they are rich ones.”

Remember, however, that Laurenti did say some small businesses still will be struggling six months from now. Those in the service sector, retail and housing “will remain under pressure,” Laurenti says.

“We've seen high-income families spending again during the holiday season,” the economist says, but businesses whose customers are primarily middle- or lower-income households didn't do as well. Laurenti doesn't expect retail to rebound before 2012 or '13.

“Two things must happen,” he says. “There has to be more job creation, and consumers must pay off their credit card and (other) debt” before retail comes back.

Housing will remain down as well. “Banks are adamant that homebuyer put 20 percent down, but families have very little savings,” Laurenti says. “If you're very good at saving, it will take two to three years” to get to the down payment.

Consequently, the surge in housing that typically leads to a surge in purchases of new appliances and furniture “isn't going to happen before 2012.”

• Contact Jim Kendall at JKendall@121Marketing Resources.com.

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