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May Economic Indicator Report

Written By Dr. David T. Flynn, May 7, 2013

The new reality of business means that companies need to be ever-more aware of macro economic events and assess the potential impact these events have on their own day-to-day operations and long-term plans. Alerus’ goal is to help ensure that customers have access to good information. This monthly report provides more than just data on economic trends; it provides expert insight to help you make sense of the information.

Download the PDF: Alerus Monthly Insights: May

Overall assessment:  Last month, both the U.S. financial markets and the overall economy continued to make incremental improvements. In addition, the U.S. saw its strength improve relative to rival economies such as Europe, England, China and Japan. Despite these improvements, there is a brewing conflict between the monetary and fiscal sides of U.S. economic policy. While we see housing improving, there are still serious issues such as deficits and labor markets that need resolution.

ANALYSIS  Bond rates/yields are very important economic indicators. For example, as yields increased in euro-area countries such as Spain and Italy, there were concerns about the inability of those countries to finance deficits or rollover debts that were due to mature. Similar concerns exist about the U.S. and borrowing, though the 10-year note yield shows borrowing costs for the government remain quite low. The low interest rate environment encouraged by the Federal Reserve lowered the yields on Moody’s AAA and BAA rated bonds as well. The very low yields are why companies refinanced much of their outstanding debt, or issued new debt, such as Apple’s $17 billion issue on April 30th. Like many individuals, businesses took advantage of the post-crisis low rate environment to refinance their debt at lower rates and free up funds for investment or other purposes. What is needed now is a growth environment that encourages businesses, and individuals, to put those funds to work.

Do you have questions about how Alerus Financial can help you reach your goals? We welcome the opportunity to discuss the many ways we can support you!

Data and the related opinions have been compiled by Alerus Financial’s strategic information partner, Dr. David T. Flynn. Dr. David T. Flynn is an Associate Professor of Economics and Director of the Bureau of Business & Economic Research at the College of Business & Public Administration, University of North Dakota. Dr. Flynn has developed forecast models for personal income and employment in North Dakota, and analyzed small business location patterns for the top 200 cities in North Dakota. His commentary on the North Dakota economy has appeared in print and online publications such as BusinessWeek, NewsWeek, American Banker, the Financial Times, the Wall Street Journal, and in newspaper and magazines from the United States, Brazil and Finland. Dr. Flynn is a member of the International Institute of Forecasters, the National Association for Business Economics, and many other professional organizations.

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April Economic Indicator Report

Written By Dr. David T. Flynn, April 8, 2013

The new reality of business means that companies need to be ever-more aware of macro economic events and assess the potential impact these events have on their own day-to-day operations and long-term plans. Alerus’ goal is to help ensure that customers have access to good information. This monthly report provides more than just data on economic trends; it provides expert insight to help you make sense of the information.

Download the PDF: Alerus Monthly Insights: April

Overall assessment:  The U.S. economy continued to improve, but growth continued at the painfully slow and familiar pace exhibited over the last several years. Last month, we saw equity indices enter into record territory and home prices continued to increase. The Federal Reserve confirmed their commitment to maintaining low interest rates into next year, if necessary, and stated they believe they have the ability to maintain low rates without losing control of inflation. The sequester came and went without too many negative effects, though the larger budget debate has not yet begun. The financial catastrophe in Cyprus did not have immediate consequences for the U.S. — though trouble in Europe could still translate into problems in America.

ANALYSIS The financial crisis damaged individual balance sheets and net worth; in many cases, this forced people into bankruptcy and lenders to foreclose on homes. Housing has been a frequent topic in this newsletter, so it seemed natural to look at bankruptcy in more detail. Total bankruptcy filings, both business and non-business, move exactly as one would expect during a financial crisis: they increase as the economy and financial markets struggle, stay high for a time, and then begin to fall.

Do you have questions about how Alerus Financial can help you reach your goals? We welcome the opportunity to discuss the many ways we can support you!

Data and the related opinions have been compiled by Alerus Financial’s strategic information partner, Dr. David T. Flynn. Dr. David T. Flynn is an Associate Professor of Economics and Director of the Bureau of Business & Economic Research at the College of Business & Public Administration, University of North Dakota. Dr. Flynn has developed forecast models for personal income and employment in North Dakota, and analyzed small business location patterns for the top 200 cities in North Dakota. His commentary on the North Dakota economy has appeared in print and online publications such as BusinessWeek, NewsWeek, American Banker, the Financial Times, the Wall Street Journal, and in newspaper and magazines from the United States, Brazil and Finland. Dr. Flynn is a member of the International Institute of Forecasters, the National Association for Business Economics, and many other professional organizations.

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March Economic Indicator Report

Written By Dr. David T. Flynn, March 11, 2013

The new reality of business means that companies need to be ever-more aware of macro economic events and assess the potential impact these events have on their own day-to-day operations and long-term plans. Alerus’ goal is to help ensure that customers have access to good information. This monthly report provides more than just data on economic trends; it provides expert insight to help you make sense of the information.

Download the PDF: Alerus Monthly Insights: March

Overall assessment:  The economy showed some signs of improvement, as seen in these areas:
•   Growth remains dismally low, but was revised upward into positive territory.
•   Initial unemployment claims were lower than expected.
•   The Federal Reserve confirmed its commitment to low interest rates.
•   The housing markets also continued to show signs of strength.
•   There was also an enormous drop in the trade deficit.

Despite all the positive signs, the political parties manage to act in a manner that raises the level of uncertainty and, frankly, scares many people and institutional investors. The sequester, and the lack of long term spending resolutions, is the epitome of this behavior.

ANALYSIS The reductions in spending brought on by the sequester have been, and will continue to be, the subject of a significant number of news stories. There are two features to see in this graph of total government spending. First, the dramatic increase in spending is clear. Second, what is also clear is that, to some extent, spending plateaued and has not seen significant increases in the last two years. At some level then, the arguments that both parties make can be supported by the data. Because each party can claim the data supports their viewpoint, it is unlikely we will see prompt resolution.

 

 

Do you have questions about how Alerus Financial can help you reach your goals? We welcome the opportunity to discuss the many ways we can support you!

Data and the related opinions have been compiled by Alerus Financial’s strategic information partner, Dr. David T. Flynn. Dr. David T. Flynn is an Associate Professor of Economics and Director of the Bureau of Business & Economic Research at the College of Business & Public Administration, University of North Dakota. Dr. Flynn has developed forecast models for personal income and employment in North Dakota, and analyzed small business location patterns for the top 200 cities in North Dakota. His commentary on the North Dakota economy has appeared in print and online publications such as BusinessWeek, NewsWeek, American Banker, the Financial Times, the Wall Street Journal, and in newspaper and magazines from the United States, Brazil and Finland. Dr. Flynn is a member of the International Institute of Forecasters, the National Association for Business Economics, and many other professional organizations.

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February Economic Indicator Report

Written By Dr. David T. Flynn, February 15, 2013

The new reality of business means that companies need to be ever-more aware of macro economic events and assess the potential impact these events have on their own day-to-day operations and long-term plans. Alerus’ goal is to help ensure that customers have access to good information. This monthly report provides more than just data on economic trends; it provides expert insight to help you make sense of the information.

Download the PDF: Alerus Monthly Insights: February

Overall assessment: The preliminary reading of fourth quarter U.S. Gross Domestic Product (GDP) came in at a surprising –0.1%, leaving many questions about the course of the economy. There are serious doubts about the ability of the President and Congress to right the fiscal situation of the United States. At the same time, central banks around the globe are lowering interest rates in order to spur their own economic growth.

Other economic indicators are far more positive. Housing prices continue to grow at a rapid pace and the trade deficit declined in the latest readings. Inflation remains low, and equity markets had a good first month of 2013. The overall picture therefore remains mixed, with some indications of strength and some that raise doubts.

ANALYSIS The Japanese central bank recently initiated a policy designed to create inflation in their economy as a way to stimulate economic growth. This may assist exporting industries within Japan, at the expense of other countries such as the U.S. Will other countries follow suit? An uncoordinated policy of “beggar-thy-neighbor” can have serious issues for trade balances around the globe and thus bears further watching.

 

 

 

 

 

Do you have questions about how Alerus Financial can help you reach your goals? We welcome the opportunity to discuss the many ways we can support you!

Data and the related opinions have been compiled by Alerus Financial’s strategic information partner, Dr. David T. Flynn. Dr. David T. Flynn is an Associate Professor of Economics and Director of the Bureau of Business & Economic Research at the College of Business & Public Administration, University of North Dakota. Dr. Flynn has developed forecast models for personal income and employment in North Dakota, and analyzed small business location patterns for the top 200 cities in North Dakota. His commentary on the North Dakota economy has appeared in print and online publications such as BusinessWeek, NewsWeek, American Banker, the Financial Times, the Wall Street Journal, and in newspaper and magazines from the United States, Brazil and Finland. Dr. Flynn is a member of the International Institute of Forecasters, the National Association for Business Economics, and many other professional organizations.

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January Economic Indicator Report

Written By Dr. David T. Flynn, January 9, 2013

The new reality of business means that companies need to be ever-more aware of macro economic events and assess the potential impact these events have on their own day-to-day operations and long-term plans. Alerus’ goal is to help ensure that customers have access to good information. This monthly report provides more than just data on economic trends; it provides expert insight to help you make sense of the information.

Download the PDF: Alerus Monthly Insights: January

Overall assessment: Unfortunately, 2012 ended on a mixed note. The political wrangling over the “fiscal cliff” damaged business, consumer confidence in the abilities of political leaders, and the strength of the economy. The end result was a solution that solved almost nothing and only pushed off difficult decisions — yet again. On the plus side, financial market performance was good for the year overall, and there was continued strengthening of housing markets. Consumers seem wary of the future, particularly when it comes to matters such as disposable income and spending. It seems that 2013 starts with more serious problems, potentially, than we dealt with in 2012.

ANALYSIS I am not usually a strong advocate of using consumer sentiment variables because they do not track neatly into real economic changes such as spending. However, the damage done by political posturing can clearly be seen in December. The University of Michigan Consumer Sentiment Index dropped over 10% from the prior month and sharply reversed a strengthening trend. Consumer spending accounts for nearly 70% of GDP, and such a drastic drop likely signals trouble for businesses and the economy.

 

 

 

 

 

 

Do you have questions about how Alerus Financial can help you reach your goals? We welcome the opportunity to discuss the many ways we can support you!

Data and the related opinions have been compiled by Alerus Financial’s strategic information partner, Dr. David T. Flynn.Dr. David T. Flynn is an Associate Professor of Economics and Director of the Bureau of Business & Economic Research at the College of Business & Public Administration, University of North Dakota. Dr. Flynn has developed forecast models for personal income and employment in North Dakota, and analyzed small business location patterns for the top 200 cities in North Dakota. His commentary on the North Dakota economy has appeared in print and online publications such as BusinessWeek, NewsWeek, American Banker, the Financial Times, the Wall Street Journal, and in newspaper and magazines from the United States, Brazil and Finland. Dr. Flynn is a member of the International Institute of Forecasters, the National Association for Business Economics, and many other professional organizations.

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Top 10 Trends in 2013: Part Two

Written By Steve Strauss, January 8, 2013

Last week, I began my annual look at the Top Trends in Small Business. This week we get to the Top 5 and what is interesting about the overall list is that it is dominated by changes to the way we work, mostly due to technology, but additionally, because of shifting attitudes and values.

Which brings us to No. 5:

5. The rise of the solopreneur: I thought I was probably onto something last year when I launched my new venture TheSelfEmployed, but little did I realize that the rise of the self-employed army would turn out to be a trend that is actually altering work itself. Whether it is Fortune Magazine stating “Welcome to the age of the freelancer,” small business expert Barry Moltz stating that “Micro startups are everywhere,” or columnist Jan Norman noting that “almost 17 million Americans are now solopreneurs, 900,000 more than in 2011” there is no mistaking that there is a new class of independent, creative, take-charge small business solo entrepreneurs on the rise.

4. You are headed to the clouds: The next three trends can all be lumped together under the title “The changing nature of work.” Here, what we see is that cloud computing is no longer a stranger to small business. Indeed, a Dell survey not long ago found that 69% of small businesses preferred to purchase software and applications as an Internet service – in the cloud – rather than as an off the shelf product. That same poll stated that those surveyed planned on adding three additional cloud-based services as the year progressed.

Cloud computing, Software as a Service, call it what you will, is proving to be a cheaper and easier way to do business and as such, is the new way that business will continue to get done.

3. Say hello to my little friend: That we are living in the time of mobile work is no surprise, but beyond that, we are quickly leaving even the laptop in the dust. Forrester Research states that 55% of businesses consider smartphone support a “high or critical priority.” And more than half of those same companies indicated they also now need to support tablets.

The challenge for the small business is that we normally rely on what is known as BYOD – Bring your Own Devise. While a smart choice and certainly a less expensive option than buying everyone a smartphone or tablet, it comes with security risks. When people are tapping into your system from anywhere on any devise, security breaches are far more possible.

This in turn means that your security systems and software must be top-notch. As one online security expert put it, it is not a matter of if you will be hacked, but when and how bad.

2. Virtual is the new physical: According to a piece in Entrepreneur Magazine, if you are looking for the workplace of the future, you are not going to find it. “”Who says there’ll be an office at all?” asks Tom Austin, vice president at Gartner, a Stamford, Conn.-based technology research firm. “Already we work from Starbucks, in the car and at our kids’ softball games.””

The article then goes on to profile a company called Floor64. “The media and consulting company maintains a brick-and-mortar space in Sunnyvale, Calif., but also runs a bunch of Skype-powered chat rooms for remote workers–many of which are buzzing for most of the day. “These [chat rooms], more than anything else, represent our ‘office,’” says CEO Mike Masnick, “and they don’t exist in physical space.”

And what is fueling this radical shift from the physical to the virtual are all of the trends that make up this column: Cloud computing, powerful mobile devices, technology, new places to work, etc.

1. Happy days are here again: For the past few years, the dour economic news permeated my annual trends column. In 2013, happily, the opposite is true. Not only is there scant bad news to be found above, but the Number 1 trend for the upcoming year is that business is back. No matter where you look, and despite what the naysayers say, the economic news is headed in the right direction: Housing starts are up, car sales are way up, unemployment is headed down, business lending is up, and so on.

So the upshot is that this is, once again, a great time to be an entrepreneur. Happy 2013 all.

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Top 10 Trends in 2013: Part One

Written By Steve Strauss, January 3, 2013

If I asked you to guess what the biggest trends in small business will be in 2013, would you say:

  • The improving economy, or
  • Social media, or
  • Advancements in technology?

And I would say, “yes.” It is all of those. Small business trends 2013 is sort of like the news show I watched recently, discussing the biggest political stories of the year. The top story turned out to be “The re-election of Barack Obama.” Even though it was not a surprise it was still both  true and interesting.

The same is the case with my annual small business trend-watching column. While many of the trends are self-evident, how they are playing out remains intriguing and important, starting with No. 10:

No. 10: Sitting on the sidelines will leave you on the sidelines: For a few years now, we have heard about businesses large and small alike that have been waiting to see what will happen in this economy, – waiting to hire, waiting to advertise, waiting to manufacture . . . waiting. Well, the fact is, time’s up. After four long years in the wilderness, people and business are moving again. Sales are up. Unemployment is down. The economy is growing.

In 2013, he who waits, loses.

No. 9: It’s a word-of-click world: Call it what you will – word-of-mouth advertising, reputation management, the sharing of posts, or what have you – but what ever you call it, it is gaining ever more in importance in our digital age.

Word-of-mouth used to be just that, by mouth, but today, word-of-click is more appropriate. And the thing is, word-of-click is not just about sharing good news any longer, far from it. Consumers and customers are ever more empowered to tweet, post, blog, and share their opinions with the world, and increasingly, they are doing it immediately, via their smart phone, as the event occurs. But the thing is, people tend to post immediately when they have a strong emotion, and often, that means a negative emotion. And that means the potential for more negative posts about your business is increasing rapidly.

Upshot: It is incumbent upon the small business owner to remain vigilant about what is being said about them online, in real time.

No. 8. Business financing bounces back: The reports I have been seeing lately are very encouraging vis-à-vis business financing. Banks are making more loans, business are getting more approvals, and more options are becoming ever more available. Evidence: Last April, the JOBS Act (Jumpstart Our Business Startups) was signed into law, and it has already resulted in an increase in crowdfunding at sites like IidiegoGo and Fundable. Other options like factoring and business plan competitions are also coming to the fore.

And more money mans more business.

No. 7. Social media turns content into dollars: For years, we have heard stories about how great and popular sites like Twitter and Facebook are, only to be followed by a punchline like “Yes, but how will they make money?” Of course it is also true that social media sites do make money with advertising, but even so, it seems that they have finally hit upon a way to take their bread and butter – the sharing of content – and turn it into dollars and cents.

It’s called sponsored content. When someone interacts with your Facebook page for example, the action appears in the newsfeed of their friends. The problem is, it often is gone in an instant as more posts are added. Sponsored Stories allow a small business to take that shared interaction and turn it into an ad that sticks to the right of the newsfeed: “Marshall Likes The Crabshack.”

This sort of advertising of shared content by people you know is cropping up all over and is a powerful way to turn friendly recommendations into powerful, long-term testimonials.

No. 6: The smartphone wins: For years we have wondered – should we advertise online, and if so, how? What about social media advertising? Is TV still the big kahuna? Well, ladies and gentlemen, we have a winner: The smartphone.

According to Business Insider, “Over half of American smartphone owners don’t go an hour without checking their device. However, most app sessions last only a minute. Businesses are going to compete harder than ever to get a slice of that engagement, and make it as valuable as possible.”

There is nothing else out there that has become as important, and as ubiquitous, as the smartphone. It is the medium you will need to master.

Next week, The Top 5.

 

 

 

 

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Fiscal Cliff 101

Written By Alerus Small Business Connect, January 2, 2013

Much of the business news in December focused on the “fiscal cliff”. While legislation to avoid the cliff was passed by Congress, there is still much confusion on what the fiscal cliff is, how the U.S. got to that point, and more. David Flynn, a professor of economics at the University of North Dakota, recently shared his thoughts on the subject.

 

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December Economic Indicator Report

Written By Dr. David T. Flynn, December 6, 2012

The new reality of business means that companies need to be ever-more aware of macro economic events and assess the potential impact these events have on their own day-to-day operations and long-term plans. Alerus’ goal is to help ensure that customers have access to good information. This monthly report provides more than just data on economic trends; it provides expert insight to help you make sense of the information.

Download the PDF: Alerus Monthly Insights: December

Overall assessment: The reelection of President Obama brought into sharp focus uncertainty surrounding appropriate policies to improve the economy. There are serious doubts about how and whether the political process and players will arrive at a resolution of the “fiscal cliff.” The cliff remains an enormous test for our leaders and policymakers — even more so given the continuing trials for the European economy and the weakness in Japan. Long-run solutions to spending and revenue are a necessity for continued economic prosperity in the United States.

ANALYSIS Real Retail Sales data show the massive decline in consumer spending is a distant speck in our rear-view mirror. Current levels are close to their historic peak. There have been minor bumps in the road, but the long view clearly displays a strong growth trajectory for retail sales. Spending by consumers is one of the important factors needed to generate sustained economic improvement (for completeness, the others factors are housing market improvements, labor market improvements, and government spending and tax changes).

Do you have questions about how Alerus Financial can help you reach your goals? We welcome the opportunity to discuss the many ways we can support you!

Data and the related opinions have been compiled by Alerus Financial’s strategic information partner, Dr. David T. Flynn.Dr. David T. Flynn is an Associate Professor of Economics and Director of the Bureau of Business & Economic Research at the College of Business & Public Administration, University of North Dakota. Dr. Flynn has developed forecast models for personal income and employment in North Dakota, and analyzed small business location patterns for the top 200 cities in North Dakota. His commentary on the North Dakota economy has appeared in print and online publications such as BusinessWeek, NewsWeek, American Banker, the Financial Times, the Wall Street Journal, and in newspaper and magazines from the United States, Brazil and Finland. Dr. Flynn is a member of the International Institute of Forecasters, the National Association for Business Economics, and many other professional organizations.

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November Economic Indicator Report

Written By Dr. David T. Flynn, November 6, 2012

The new reality of business means that companies need to be ever-more aware of macro economic events and assess the potential impact these events have on their own day-to-day operations and long-term plans. Alerus’ goal is to help ensure that customers have access to good information. This monthly report provides more than just data on economic trends; it provides expert insight to help you make sense of the information.

Download the PDF: Alerus Monthly Insights: November

Overall assessment: The growth in the U.S. economy continues to be frustrating, largely because of the slow rate of improvement — but growth remains positive. Housing markets now provide two good measures (housing starts and home prices) for the one measure that still remains sluggish (existing home sales). Maybe now we have reached the point where we can start complaining not about growth, but about the quality of growth. Growth does not mean that policy authorities have the luxury to remain complacent. Against the backdrop of drastic fiscal changes, even the lame duck Congress will have significant work to do. Regardless of who wins the election, their ability to deliver on campaign promises will be tested almost immediately given the current fiscal situation.

ANALYSIS Beginning in 2001, a clear trend started with larger and larger amounts of U.S. federal debt (as a percent of GDP) held by foreigners or international investors. Why did the trend start in 2001? U.S. housing assets — mortgage-backed securities in particular — were attractive from a risk-return perspective. Call this a global search for yield. What explains the recent surge in foreign ownership? It is still that risk-return tradeoff, but with much more emphasis this time on the risk. U.S. assets are safer than European government bonds or investing in the slowing Chinese economy, and there are no clear rivals for U.S. economic performance right now.

 

Do you have questions about how Alerus Financial can help you reach your goals? We welcome the opportunity to discuss the many ways we can support you!

Data and the related opinions have been compiled by Alerus Financial’s strategic information partner, Dr. David T. Flynn.Dr. David T. Flynn is an Associate Professor of Economics and Director of the Bureau of Business & Economic Research at the College of Business & Public Administration, University of North Dakota. Dr. Flynn has developed forecast models for personal income and employment in North Dakota, and analyzed small business location patterns for the top 200 cities in North Dakota. His commentary on the North Dakota economy has appeared in print and online publications such as BusinessWeek, NewsWeek, American Banker, the Financial Times, the Wall Street Journal, and in newspaper and magazines from the United States, Brazil and Finland. Dr. Flynn is a member of the International Institute of Forecasters, the National Association for Business Economics, and many other professional organizations.

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