First Things First

Solid Economy Needs Solutions to Tariffs and Worker Shortage

The economy keeps humming along, the Federal Reserve reports.

Its latest Beige Book, the central bank’s periodic collection of economic and business anecdotes from across the country, found steady business activity with concerns about sustaining growth.

“The outlook generally was positive for the coming months, with expectations of continued modest growth,” the report stated.

On the jobs front, “employment grew at a modest pace” as did compensation.

Agriculture was an area of weakness, hit hard by bad weather and caught in the tariff crossfire. The Dallas district reported “Many agricultural producers were concerned about imposed tariffs and uncertainty surrounding future trade policy.”

The negative effects from tariffs have been felt all over the country. Businesses “saw some increases in input costs, stemming from higher tariffs and rising labor costs.” The Philadelphia district noted “trade uncertainty further delayed business investment.”

The Richmond district reported “a North Carolina furniture manufacturer was unable to pass tariff-related cost increases on to customers, and a West Virginia rubber manufacturer attributed a drop in business from Chinese customers to the trade wars.”

Another concern is the lingering worker shortage. Areas of the country “noted continued worker shortages across most sectors, especially in construction, information technology, and health care.”

The latest JOLTS (Job Openings and Labor Turnover Survey) data for May showed 7.3 million job openings. At the same time there were nearly 5.9 million people unemployed. We continue to have more job openings than workers to fill them.

Employers in the Richmond district reported “tight labor markets and difficulty filling positions, particularly for skilled tradespeople, engineers, experienced bankers, IT professionals, and hospitality workers.” In the Atlanta district employers were investing “significantly in training programs to attract new workers or upskill existing staff.”

With these reports policymakers have their to-do list: end the tariffs battles, approve the US-Mexico-Canada Trade Agreement, come together on an infrastructure deal, and develop solutions to increase the workforce – which must include immigration reform.

If we want to continue the longest economic expansion in U.S. history, Washington must tackle these issues head-on.

Diving In

Ketchup titan Heinz’s first claim to fame was making something a little spicier:

Horseradish was his first focus. Homemakers in those days made their own horseradish by grating the plant. This took time, bruising knuckles and watering eyes. Heinz’s bottled horseradish was an early “convenience food,” saving time and energy. HJ found that by using more expensive clear glass bottles, his customers could be assured of the product’s purity. Using rarer clear vinegar instead of brown apple cider vinegar showed the horseradish to its best advantage. Soon HJ was traveling to Pittsburgh to personally sell this and other premade products to hotels, restaurants, and wholesale and retail grocers. Everywhere he traveled, he took notes on the market, the competition, and what customers wanted.

These early lessons led HJ Heinz to believe in several key principles. First was the importance of purity and quality of product, in an era when others used sawdust and floor scrapings as filler in their products. Second was the necessity of using only the best raw vegetables to insure his high quality standards, and to continually experiment with new seeds and plants. Third, he understood the importance of packaging—that a better package could increase sales and often allow higher pricing.

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The Big Picture

To celebrate the 50^th anniversary of the Apollo 11 moon landing the Smithsonian projected a Saturn V rocket onto the Washington Monument.

Looking Ahead

July 22, 2019. C_TEC will visit Seattle, WA, on their TecNation tour. The event is focused on the transformative nature of technology and how it affects rural America.

July 23-24, 2019: The U.S. Chamber of Commerce Foundation hosts the Building Resilience through Private-Public Partnerships conference, focusing on the collaboration required among private, public, and nonprofit sectors to help mitigate the effects of natural and human-made disasters.

August 1, 2019: The Cyber Security Series – San Diego, powered by FICO, will discuss growing cyber threats and the importance of cyber insurance as a risk mitigation/risk transfer tool for organizations of all sizes.

To Play Us Out

Let’s celebrate the moon landing anniversary with some Frank Sinatra.

Have a song recommendation? Please email me.

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