Symposium 2010: What is your assessment of the economy and general business conditions?

The economic outlook is pretty bleak at this point. Unemployment isn’t going to go down, because businesses aren’t hiring. Why? There’s not enough demand because a lot of people are out of work and others are fearing they too may be in the unemployment line. Businesses aren’t going to hire if they have this massive liability known as Obamacare thrust upon them.

Let me put this in perspective with an example. Myrtle Beach is a major vacation destination much like Orlando. I was talking to a hotelier there earlier this month. They have a small operation with about a hundred and twenty-five rooms. They’ve got about ten office staff, their GM, three maintenance men, and twenty housekeepers. They’re estimating that Obamacare may cost them anywhere from $300 to $1,000 per month per employee once it take effect. At the low end of $300 per employee (they’ve got thirty-four employees) per month, they’re looking at $10,000 per month. Even if it only costs them half that, they’re looking at $60,000 per year. Considering the average annual pay is about $15,000, that’s four jobs that are not going to be created and more than likely they’re going to reduce the staff to make up the expense. They’re a small operation, and they cannot afford a new government mandated cost of that magnitude. It would actually be cheaper for them to pay the fine per employee for not providing coverage than go with this program. I haven’t verified their numbers, but as we all know, insurance is expensive and this is their livelihood, so I don’t think they’re far off in their assessment.

There isn’t going to be job creation as long at this noose is around the necks of small businesses. In fact, I expect that we’ll see massive layoffs if this bill is not repealed.

Aside from that, American manufacturing continues to die a slow death.

Yes, interest rates are low, but the banks aren’t lending any money. The real estate market is still in the tank. I don’t think we seen the full magnitude of the foreclosure situation. What has happened is only the tip of the iceberg. The Fed is moving around money to help the banks appear to be solvent, but the root cause of the problem, all these toxic assets, hasn’t gone away. It’s all sleight of hand at this point, a vast shell game, a Ponzi scheme, if you will.

Overall, there’s not much to be positive about when it comes to the economy. I’m pretty pessimistic.

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