St. Cloud business professionals gathered at Resource Training Solutions in Sartell to discuss the current economic standing in the quarterly business report for the St. Cloud area and the rest of central Minnesota.
The event was hosted by St. Cloud State University Economics professors Rich MacDonald and King Banian, who worked with the St. Cloud Times to put together surveys and publish the data.
According to their research, the central Minnesota area is expecting a decline in capital expenditures and future outlook is as weak as it was in 2008. This means that businesses are uncertain of what the future will hold for their companies. One reason is because of the 2016 election.
With a potential decrease in capital expenditures, employers can expect an equal amount of hires as they do layoffs.
“Businesses traditionally, if they are uncertain, will usually make cuts in capital expenditures during an election season because a new president can influence the economy. They don’t know what political party will control Washington,” Banian said. “Most businesses would favor Donald Trump’s tax plan because it will cost them less in the long run, but they also don’t like the idea of shutting out immigrants since they are a big factor in today’s job market.”
Despite recent cuts, businesses believe wages will rise and continue to rise.
One of the questions that came up during the report was if this decrease in capital expenditures was unexpected, or if it’s something businesses see coming.
According to the research, governments usually boost their economy right before an election cycle in order to improve their chances of reelection; the last four elections were relatively close to the current one: very uncertain.
Along with these decreased expenditures, other economic indicators link back to the current uncertainty of the central Minnesota private sector. These include the slowdown in labor force growth, the continued rebound in residential building permit valuations, and the collapse of help wanted in advertising.
Advertising is very valuable to business, reaching out to employers that are in high demand, but one of the challenges brought up during the report is: where do businesses want to put their money when it comes to ads? Online or in the local paper.
According to their findings, the share of print and online ads have dropped significantly from September of 2012 to July of 2016.
“The print ads have gone down because businesses no longer think that potential hires are looking for ads in the newspaper. I was talking to a radio person and they said the stations are having them read job postings on air,” Banian said. “If I’m looking for someone to do cyber security, I’m not going to put an ad in the paper because no one will find it. However, if I’m looking for someone to do a welding job, I might put in a print ad for someone of an older age looking for that particular job.”
One of the highlights during the QBR was the high interest in central Minnesota businesses looking to focus on decreasing cyber crime.
It is uncertain how big of a deal cybercrime actually is, but not many companies want to admit that they’ve been hacked. According to the research, U.K. banks have lost 641 million dollars to cyber-related crimes and the U.S. voluntarily reported a loss of 120 million.
Both Banian and MacDonald said that companies should start taking a look at investing more in cyber security and to hire more people trained in that field from trade schools and technical colleges.
Many businesses at the report showed concern of not only what damage cyber hacking could do to businesses, but to their consumers as well, since they make up a large portion of a company’s profits.