Experts foresee business bright spots amid ‘dark’ 2012
The mood for business is cautiously optimistic going into 2012, but the specters of the national debt, social unrest and the economic turmoil in Europe continue to loom over any potential recovery, a panel of experts told suburban business leaders Thursday at the Daily Herald Business Ledger Newsmakers Forum in Downers Grove.
A group of about 100 business executives and leaders listened to the panel discuss the Business Outlook for 2012 at the DoubleTree Hotel and Convention Center. While the experts did not see blue skies ahead, they did note there will be a number of opportunities for businesses to survive and grow in the upcoming year.
While the three panelists differed on what could be expected, they all agreed that 2012 could be a historic year in determining the future path of the country and world.
David Nielsen, founder and president of Big Wave Advisors in Wheaton, noted the general mood among the population is negative as high unemployment and distrust in government and corporate America continues. Given the current state of affairs and the growth in populist movements such as Occupy Wall Street, Nielsen predicted 2012 could be a year that equals the explosiveness of 1968, when the country was embroiled in similar dissatisfaction over the economy and the Vietnam War. He added the presidential election in 2012 could bring out the type of dissent seen in 1968, and political conventions could draw protests that may lead to violent confrontations.
“What concerns me about 2012 is that the social movement has darkened this much, and we haven’t even begun to feel the pain that will come to this country when the budget deficit is closed and many of the services that many people depend on will no longer exist,” Nielsen said.
Jack Ablin, executive vice president and chief investment officer at BMO Harris Bank, also noted some key factors that fuel the economy, such as retail spending, are skewed to a small percentage of the population. For example, he said the top 20 percent of U.S. households account for more than 50 percent of retail spending.
“These households are more similar than different. so just one catalyst could really change the market,” he said.
But while he agreed the big picture was not too clear, he stressed economic recovery would lie with small and mid-sized businesses. Ablin noted that over the last three recessionary periods, companies with less than 20 employees accounted for 4 million new jobs, while big companies lost 5,000 jobs.
“It’s people like you that create the jobs, not the companies in the Standard & Poors 500,” Ablin said. “The fuel for the economy comes from people like you.”
Ken Clingen, managing partner of Clingen Callow & McLean LLC in Wheaton, said 2012 will bring some unique opportunities for businesses as federal capital gains taxes, income taxes and estate and gift taxes give them the ability to move capital to define corporate strategies and secession planning. However, he added. that window could be limited if Congress decides to make changes to the tax laws next year.
Opportunities for investment and growth will be good in 2012, Clingen said. “But after that, all bets are off.”
While the panel agreed the stock market will be an area of potential gain for investors, the experts differed on the logic. Ablin said the market is still undervalued and believed investments will improve as the economy continues to grow. Nielsen, however, predicted a bear market will push the stock market down, creating an opportunity to buy stocks and companies at very low prices.
“My theme for 2012 is ‘patience and cash.’” he said.
Presenting sponsors for the Daily Herald Business Ledger Newsmakers Forum are BMO Harris Bank and Clingen Callow & McLean LLC. Corporate sponsors are American Slide Chart/Perrygraf, Comcast Business Class, Northern Illinois University MBA College of Business and DoubleTree Suites. Marketing Partners are GOA and the Lisle, Lombard and Oak Brook chambers of commerce.