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Thu March 15, 2012
Optimism Driving The Economy, But Can It Last?
Originally published on Thu March 15, 2012 3:16 pm
NEAL CONAN, HOST:
This is TALK OF THE NATION. I'm Neal Conan, in Washington. More good unemployment numbers today, oil prices tick down, positive news even about the housing market. Yes, many millions are still out of work, banks continue to process foreclosures, overall economic growth remains sluggish. But right now anyway, some sectors are doing better, a few are actually booming.
As things slowly look up, we want to hear from employers and workers, truckers and farmers, workers and the unemployed. Have you changed your plans in this slightly better environment? Our phone number, 800-989-8255. Email us, email@example.com. You can also join the conversation on our website. That's at npr.org. Click on TALK OF THE NATION.
Later in the program, a former politician inmate with words of advice for Rod Blagojevich: Don't stare, don't snitch and don't eat the Snickers. But first, looking up, and we begin with Jill Layfield, CEO of Backcountry.com, and she joins us from a studio in Park City, Utah. Nice to have you with us today.
JILL LAYFIELD: Thank you very much, Neal. I'm thrilled to be here.
CONAN: And you and your company are among those cited in an NPR series "Looking Up," and we heard that things did not look so good for you guys a couple of years ago.
LAYFIELD: Yeah, 2008, 2009 were tricky years for us, but we've come out of those years stronger than ever and enjoying a great start to 2012.
CONAN: What changed?
LAYFIELD: You know, obviously the economy improved, and I think our customers got excited again about buying outdoor gear from us and getting outside and enjoying the great outdoors.
CONAN: So it is consumer - I mean, I'm sure you're wonderful marketers and sell fabulous products and all that, but it is consumer confidence that you think has turned the corner?
LAYFIELD: Definitely, and we sell premium outdoor gear, and when the economy hit a rough spot, obviously people pull back on their spending and weren't buying as much in terms of outdoor gear.
CONAN: And you have been, the last couple of years, hiring.
LAYFIELD: We have. The last few years, in 2011 and even in 2010, we added, you know, anywhere from 100 to 200 new employees, and we'll add a couple hundred again this year. So we've definitely been hiring strong again.
CONAN: And those decisions about going to hire a couple of hundred people this year, those are not made lightly, those committing you to a lot of outlays. So what is it that you think is going to get better?
LAYFIELD: Well, you know, in terms of the investments we're making, we're hiring folks to continue to build out a great user experience online and give our mobile customers what they want. And we added a bike business, competitivecyclist.com, to the company last year, and so we are, you know, improving the experience of building a bike online and having, you know, your dream bike built for you and shipped to you, which is something new online.
So all those employees that we're hiring are, you know, committed to just improving that overall user experience.
CONAN: So what is the combination? I mean, you're talking about those bikes. So you actually make stuff, but also you sell other people's stuff.
LAYFIELD: Yeah, we primarily sell other people's stuff. We do have a few brands that are what are considered house brands, Stoic being our big house brand, but what we do in the example of bikes is allow a customer to come online to competitivecyclist and chose all the different components and parts that they want, and then we assemble that bike here in Salt Lake City in our bike shop.
We have a bunch of bike mechanics that are building these kind of custom dream bikes. So that's another place where we've, you know, ramped up hiring is bringing in folks that are passionate about bikes and building bikes to serve the customers that are now buying bikes online.
CONAN: So it is that combination of - you've got obviously people who get their hands dirty, but there is technology that is, it's absolutely the core of your business.
LAYFIELD: Oh absolutely. Technology is kind of at the heart of what we do. It drives the user experience online when you come to our websites. It allows us to ship orders out super-fast to customers, but one of the biggest series that we are hiring for is developers, software engineers, user experience designers, product managers because, as you said, technology is at the core, and it's manifested in this, you know, experience of buying outdoor gear, premium outdoor gear online.
And that's not, you know, that's not a small task. We have to build a user experience that allows folks to, you know, have that offline experience online and it be seamless and easy.
CONAN: And so this is a company that, given what you're talking about, really could not have existed without high-speed Internet and without everybody being wired, and five years ago, this wouldn't have been possible.
LAYFIELD: Indeed, and, you know, part of the job creation, as I was kind of speaking to earlier is about that evolution of, to your point, you know, people now buying more online, and now the next evolution is people buying through their mobile phones. So that's kind of the next, you know, wave for commerce, and so that's created, again, a bunch of jobs within our company because we're hiring developers to build mobile experiences for our customers.
CONAN: And how far do you project into the future? You're talking about this year, but do you look - do you have a five-year plan?
LAYFIELD: Yeah, we have a seven-year plan, so...
(SOUNDBITE OF LAUGHTER)
LAYFIELD: We're - you know, it's kind of funny to say we have a seven-year plan because things are changing so quickly in the world of ecommerce and mobile commerce, but we like think big. We like to think about the future and think about how we're going to continue to innovate and do something very exciting and meaningful online.
CONAN: Well, we wish you the best of luck. Thanks very much for your time today.
LAYFIELD: Thank you.
CONAN: Jill Layfield, CEO of Backcountry.com, a retail online store that specializes in outdoor gear. She joined us from Park City, Utah. With us here in Studio 3A is Marilyn Geewax, NPR's senior business editor, Jill Layfield one of the people included in the NPR recent series "Looking Up," and Marilyn Geewax oversaw that series.
And as you listen to what she had to say here, there's a lot of elements that consumer confidence, that willingness to spend, that's one of the things that seems to have turned around.
MARILYN GEEWAX, BYLINE: Absolutely. This is - her story is the story of what we're hearing in so many businesses around the country, that people were holding back for a long time. This recession was very bad. It was deep. It was broad. It hit everybody. So we saw a lot of people who not only held back on their shopping, but they just became depressed. They just didn't want to go to the store anymore.
We had really bad numbers in 2008, for example, on autos, on retail. And lately, though, you know, there is such a thing as a business cycle. After a while, things wear out. You really do need a new car. You need a new couch. You want to buy something to go on vacation with. You need a new bike.
So there's this pent-up demand where people are starting to shop again, and that ripples out. If you shop a little bit more, then more people get hired. Restaurants, for example, have added about a half a million new workers in the past year.
So you start seeing other people, your neighbors getting jobs. You feel just that little bit more confident. So you buy a little bit more, and it builds itself. The economy seems to be starting to heal from the bottom up. And just as she said, people who were, in 2008 and '09, saying I don't think I'll - I'll just get by with my old bike are now going on to their new mobile phones and figuring out new ways to shop.
So that's what our series was about, was to go around the country. We sent a group of reporters out to just find these kinds of success stories. Now, Neal, I just want to say obviously this is still a very uneven economy. There are many pockets of real suffering out there still. We have nearly 13 million people looking for jobs. Many home prices are still declining. Millions of people are behind on their mortgages or facing foreclosure. We have to recognize all of that bad news.
But we also have to look at these things that are looking up.
CONAN: There are, as you know - a lot of people say wait a minute, the job numbers, we've seen the unemployment rate come down to 8.3 percent, and this doesn't seem to be justified by what we're seeing in terms of growth in the gross national product.
GEEWAX: Well, one theory about that: Why is it that all of a sudden we're seeing this snapback of jobs coming back in ways that seem to exceed what the overall growth rate is? And we think what happened, or at least one theory, is that when the economy turned so bad in 2008 and '09, employers over-fired. They got scared. They thought geez, I'm not - what if I can't go to the bank and get a loan, and I won't be able to make my payroll. And they just froze up.
All across the system, people tried to just make do with as few workers as possible. So now things are getting back to a more normal environment. They feel more confident that yes, I will be able to go to my banker and borrow money. So they're returning to more normal levels of staffing.
So really what we saw was over-firing in 2008 and '09, and now we're seeing a snapback where hiring is actually starting to exceed expectations, and we got more evidence of that again today. It seems like every week when we come out with these weekly initial jobless claims numbers, they're almost consistently turning out to be better than economists had expected.
So we're getting upside surprises that we hadn't seen before.
CONAN: How does this upside, how does this fact that the economy is looking better, how is that changing your plans? Give us a call, 800-989-8255. Email firstname.lastname@example.org. We'll start with Jim, and Jim's with us from Santa Rosa in Florida.
CONAN: Hi, you're on the air, go ahead please.
JIM: Oh, thank you. Well, my comment is that we (unintelligible) - last year, in particular before January, we went eight months without having work, and we're painting contractors, and we also do remodeling. And it was so flat that we barely survived. And then it seemed right after the first of the year, we have book more contracts now than we ever had, and I've been here for over 20 years, and we're - we have work to last us through next year.
And since I live in a beach resort area, we have a lot of spring-breakers down here now, and I deal with a lot of condo association people, and they have all told me they are booked through the summer, and they are also booking a lot more even for next winter, which is unusual for our area.
And everybody down here is hiring. There's just - it's not like eight months - if you had said eight months ago, we were about to pack up and go to do the oilfields in North Dakota. And now here we are busier than we've ever been.
GEEWAX: There was a new, Neal, a new survey came out today from Prudential real estate that did a survey of how Americans feel about buying real estate or just the whole real estate sector. And it was overwhelmingly positive, in a way that it has not been for five years because all of sudden, people are looking around and saying gee, interest rates really are low, and I bet prices are going to start to move up.
They're seeing more churn in their neighborhood, that some houses are starting to sell. So that doesn't mean people really are going to buy because their credit scores may still be terrible, they may not have enough money for a down payment, but they feel more positive. They want to start to buy, and at least again, healing from the bottom up, that's how you start.
CONAN: Jim, are you going to be hiring?
JIM: Yes we are, and actually we've hired two people in the last week. We had a crew of just - we were a small crew of eight people before, and then we went just to myself and my business partner, and we've had to hire people now, and based on the contracts we have, we may have to hire another 10 people here in the next couple of months.
CONAN: Well, continued good luck, Jim, thanks.
JIM: Thank you.
CONAN: We're talking about the economy, many parts of which are finally beginning to look up. We'll talk more with NPR's Marilyn Geewax in a moment. We want to hear from you. Employers, workers, truckers, farmers, workers and the unemployed, have you changed your plans? Give us a call, 800-989-8255. Email us, email@example.com. Stay with us. I'm Neal Conan. It's the TALK OF THE NATION, from NPR News.
(SOUNDBITE OF MUSIC)
CONAN: This is TALK OF THE NATION from NPR News. I'm Neal Conan. All this week, NPR's run a series of stories on the recent uptick in the economy, "Looking Up: Pockets of Economic Strength." Those pockets include industries from manufacturing and technology to agriculture and energy.
Just today, Shell Oil announced plans to bring a new chemical plant to western Pennsylvania, along with, potentially, thousands of jobs and other businesses. Many of the industries see an uptick, are helping to propel the overall economy, though there are plenty of other pockets still stuck in what feels very much like a recession.
As things slowly look up overall, we want to hear from you. Have you changed your plans? 800-989-8255. Email us, firstname.lastname@example.org. And you can also join the conversation on our website at npr.org. Click on TALK OF THE NATION. NPR senior business editor Marilyn Geewax oversaw the "Looking Up" series and joins us here in Studio 3A. You can find a link to those stories at npr.org.
Marilyn, before we get to more calls, things began to look up in the winter of 2010 and again last winter. What makes this one different? Those fizzled.
GEEWAX: Are you suggesting that economists sometimes say this time it's different, and it isn't? You know, it's true, especially last winter. In the beginning of 2011, many stock analysts were saying now is the time to buy stock, that things were moving up, a lot of realtors started getting excited. But it turned out to just sort of fizzle.
By the summertime, people were really talking about the double-dip recession again. A lot of things happened. In March we had the Fukushima disasters with the tsunami, the nuclear power plants in Japan, and then we had the Greek debt crisis got worse, so everything got a little shaky there, where it wasn't clear if Europe was going to be able to survive with its euro currency.
And then in August we hit into the political crisis in this country over the debt ceiling. Those events were very unnerving. They really hurt the economy a lot, and people really sort of thought we were falling back off the cliff again, that we were heading back into another recession.
And by October, it felt pretty grim, but then all of a sudden, just strangely, it just started to turn. And you look at the stock market, which is a pretty good leading indicator of where the economy's been going, since October the stock - stock prices are up something like 25, 30 percent.
If you bought stock back in October, you look like a genius now. It turned around, and the same thing with the labor market. It seemed so grim last fall, and now here we are, you know, with these reports time and again exceeding expectations. So we're back at a point where - is this another false spring? Will we only crash and burn again this summer?
Here are some risks. There's the confrontation between the West and Iran, that's a very serious problem that could further drive up oil prices, which could further hurt the economy. The European debt crisis - certainly it's far from solved. China is, it's an economy that looks like it's struggling now. That could reverberate back to us. And of course there's always the potential for more political crises.
It is an election year. There could be other events in Washington that unnerve people. And, you know, the weather, I mean the Fukushima thing, who saw that coming? Here we are with really unusual weather this winter and edging into spring. I don't know, is this going to be a terrible year for drought? Will a heat wave be really brutal and harm the agricultural sector? Those are all unknowns. No one can predict those things.
All I can say is that what the data show now, what we are looking at at this moment, is an improving economy, and in some sectors improving dramatically. So anything could happen in the future, but I think we have to see and recognize that there are some real pockets of strength out there.
CONAN: Let's go next to Tony, Tony with us from Prescott, Arizona.
TONY: Hi, Neal.
TONY: I'm here(ph). I know that she's saying that there are some pockets of strength. Well, I live in a pocket that's not strong at all. OK, we are - I am a - in four days I will have been unemployed for a year. My restaurant closed down on March 19. There are - in the area that I live in, there are 110 restaurants that are just locked up. I mean, they - all the equipment's in there.
And so I'm competing with at least 110, 200 other chefs that don't have - none of us have jobs, and I finally signed my house over, back to the bank, a deed in lieu of foreclosure, and I've packed up, and they gave me - the bank gave me $750 in moving expenses so I can move to Seattle.
CONAN: And do you have good prospects there?
TONY: My son and daughter live there, and they tell me that that's a place that's a food mecca, and there are tons and tons of jobs. You look on Craigslist. I've been looking on Craigslist for the past month, and usually about every day, there's about 50 or 60 in the food and hospitality business, places that are looking to hire.
CONAN: And what finally convinced you to hang it up? Was it the house?
JIM: Well, it was the house. It was - and having to file bankruptcy and just not wanting - wanting to compete with my friends for a job. I felt bad. You know, these are guys that - we're a close-knit community, and especially when you work the hours we work, and then we end up going out together, you know, at night to relax, and I just felt like I don't need to take somebody else's position, and they don't need to take mine, and it's time for me to move on.
CONAN: Tony, good luck to you, thanks very much for the call.
TONY: Appreciate it, thank you.
GEEWAX: That's really a good example of how the economy starts to heal. What we've been through with this Great Recession was terrible. So many lives, literally tens of millions of lives were directly affected by lost jobs, lost homes, and really in a sense all of us have suffered.
Anyone who owns a home has seen their home values fall. People have lost money in their retirement accounts. It's going to be a long hard slog to get back to where we were, and for many people they really never will be able to fully recover. That was a horrible recession.
But what has to happen to move forward is exactly what this gentleman has described, capitulation, in a sense, where you say, OK, this just isn't working for me anymore, I need to move to where the jobs are. And although it's very hard on the individual that - when that happens to you, it feels very bad, and my sympathy is with anyone who's going through that.
But really in the larger sense, that's what needs to happen for the economy to really get going again, is for people to say this thing's a dead end, I'm going to go where the jobs are, and that's why we see people moving to North Dakota, where there are lots of energy jobs. That's why people are moving out to Utah, to take jobs in the tech sector. Wherever the jobs are, that's where people are starting to head.
CONAN: Here's another email from - this from - describes himself as a chef at large, Jeffrey in Cedar Rapids, Iowa: We all assume that we can return to where we left in 2008. We may never return to what we once had and may have to be satisfied with lower expectations. Maybe that was as good as it gets.
And a lot of people, yes, going back to work but maybe not making as much as they once did and maybe not in the same sector, maybe not in anything they ever went to college to study.
GEEWAX: You know, I've seen a study that showed that of all the industries, on a percentage basis, the hardest hit thing was newspapers, and of course I came out newspapers, where I lost my job. So I have a lot of friends who have been through that kind of experience. And I would have to say that overwhelmingly people have had to leave the industry, change things that they wanted to do, that they grew up thinking they were going to work for a newspaper until the day they retired, and they can't.
We've all had to move on, and for many people, that meant taking lower wages. But you know, I mean that's what the economy is. There is churn. We gain jobs, we lose jobs. It's a process, and right now the good news is that the part of the process that is - seems to be picking up is that at least there are jobs to move on to, even if it's at great personal pain for having to move from your home or your neighborhood.
CONAN: Let's go next to Dillon(ph), Dillon with us from Detroit.
DILLON: Hi, how are you guys doing?
CONAN: Good, thanks.
DILLON: I'm just calling to let you know, here in suburban Detroit, pretty much once the auto industry looked like it was dying, the small manufacturers, distributors out here, including me and my partner own a machine shop, it looked like we were all going to die out there too. But pretty much as the industry's come back, we've been able to buy new machines, hiring up new people, get back to full employment.
And I just really want to thank pretty much everyone involved in, you know, keeping Detroit afloat and keeping the industry going. There's a lot of jobs (unintelligible) out here, and you know, thank you for taking my call.
CONAN: Oh, and how does it look in the months ahead, Dillon?
DILLON: Actually, we've been swamped. We really can't keep up with orders and everything, not just local buyers, but we've got a lot of European distributors and everything still picking up. So, I mean, things look great out here. Not everyone out here is doing as well as we are, but definitely since the auto industry has come back, the whole region's, you know, been on a bit of an upswing.
CONAN: All right, well, continued good luck then.
DILLON: Thank you.
CONAN: Here's an email from Anna(ph) in Chelsea, Michigan: This improvement in the economy must have skipped right over southeastern Michigan. Here our family and others I know are still struggling. For us it's not a decision between organic milk and regular milk at the market but whether to get milk at all.
My husband and I own a martial arts studio. Our student body has steadily dwindled as parent after parents tells us they have to choose between paying for Suzie's lessons or paying for her braces, paying for Jimmy's training or paying for gasoline for their commute.
To help ends meet, we started a heritage poultry farm, but even the future of that is murky as more and more families start raising their own hens in order to become a little more self-sustaining. If the economy is indeed improving, we would sure like to see it. So two different answers from different sectors, two different parts of Michigan there.
And Marilyn, as we look at this, obviously this is really spotty - location, location, location, the old line about the real estate business.
GEEWAX: To me, it sort of looks like when you're putting up a tent, you know, you have sort of a couple of tent poles that you stick up and you try to lift the whole – the whole tent up by pulling up on these things that are standing up strong. And right now, what's standing up strong is autos, agriculture, energy, technology. They're sort of serving as these tent poles that are pulling up everything that's been sagging.
Now, maybe you're still in one of those really saggy parts of the tent where it hasn't straightened out yet. But if the tent poles keep rising and they get stronger, maybe we can lift the whole economy moving forward. And I think that's where we're at right now, where some of it is strong and sturdy and some of it is still really droopy.
CONAN: And are we talking about the economy of 2008 coming back, or are we seeing something structural here? Is - are things changing somehow?
GEEWAX: Well, technology is just such a huge factor. It's just as they - our first guest Jill was talking about with her business, that she's creating jobs now that in 2008 you couldn't have even thought about because not enough people had smartphones. Now that we have all of this mobile technology, jobs are changing because the way we work, communicate, it's all changing, especially tablets.
You can't underestimate, you know, how - what a big change the tablets are because instead of having to buy an expensive computer and expensive software, you could go out and buy a tablet for maybe, you know, five, six, $700 and download apps and have such great technology at your fingertips, literally at your fingertips now.
So these kinds of new technologies that literally were not in existence in 2008 are changing how we shop, talk, watch TV, all kinds of things. So the economy that is emerging on the backside of this Great Recession might really be quite different.
CONAN: Here's from - email from Katie in Austin, Nevada: I have four friends under the age of 25 who have just purchased homes for the first time since December. A Navy veteran friend, who's been looking for work for almost a year, has received three job offers this week. The outlook definitely seems to be improving.
NPR did a series of reports called "Looking Up," and Marilyn Geewax, our senior business editor, oversaw that series. She's with us here in Studio 3A, talking about it. 800-989-8255. Email: email@example.com. You're listening to TALK OF THE NATION, coming to you from NPR News.
And let's go next to Tom(ph), Tom with us from Green Bay in Wisconsin.
TOM: Yes. Good afternoon, Neal. Great show.
CONAN: Thank you.
TOM: I just wanted to make a comment. I'm in the business of making bags, like grocery bags and store bags, basically. And we had a strong layoff in 2009, 2010, about, you know, half our workforce, just because the orders weren't there. And approximately, oh, probably about eight or nine months ago, we started rehiring. We were almost back up to where we were before the layoffs, and now they're talking about hiring additional people because the orders keep coming in.
What's kind of interesting is that when you make something like bags, like for groceries or for consumer products, that's one thing, is when - if you're selling more bags, that means somebody's purchasing something to put it into the bag. It's a real basic industry, and we've seen a real big uptick in that lately. So that's telling me that people must be buying more products, and so I'm feeling real optimistic about the future.
CONAN: So the bag indicator. That's what - that's the - that's what we should all be looking at.
TOM: Well, it's one of the things. It's one of the things. I'm hoping - you know, it's been a steady increase, and, you know, with any luck, I think the economy will bounce back. You know, you have heard of things too - people actually making things again back in the United States. I've heard several comments about - from people in my area about a lot of jobs coming back from places like China and places like South - or South America.
And that's - to me, that's really what it - the heart of it, is to get - you know, it doesn't really make any difference if Republicans or Democrats are in the White House or controlling things. It's we have to start making things again. And it makes me feel good to see those jobs that are actually doing something, creating something are coming back to America. That'll just percolate up and make even, you know – it'll make the whole system work so much better.
GEEWAX: One of the stories that we had in this "Looking Up" series was exactly that. A reporter went to a factory where jobs were actually coming back from China. You can find this if you go to npr.org and just put into the search engine looking up, and it'll take you to the whole collection of all of these different stories about the different sectors that have been looking up. But I really thought that was one of the most heartening of all the pieces, was to see that jobs were actually returning from overseas because the quality of the American workmanship was so good. And a lot of suppliers just have come to the conclusion that it really is best to buy in the United States.
CONAN: Tom, thanks very much.
TOM: Well, thank you, Neal. Bye now.
CONAN: Talked about the bag indicator, here's Jack in California: I went to a Cresco's yard last week to find help wanted posters everywhere on every window. They have nine Bay Area locations. They were looking for mechanics at every one of their nine yards. This company rents heavy equipment.
What does that tell you? Well, California has been one of the most troubled states, Marilyn, and if California - people in California are renting heavy equipment, that speaks well.
GEEWAX: Yes. This is one of the things that I've certainly been seeing in the economy. I've seen a number of reports about this, talked to a lot of business owners. That one of their biggest constraints on growth right now is the lack of workers who are trained at doing things like driving big trucks, working heavy equipment. You really - it's amazing how there are really lots of blue collar jobs that are starting to go begging because people aren't properly trained for them.
So I think that's one of the things we're going to see in the coming years, just a lot more people not just trying to come directly back into the workforce, but getting into the training programs they need to become useful with some of these heavy equipment jobs.
CONAN: And this from Ryan(ph) in Clearfield, Utah: I work for a small online bookstore based in Utah. Through the whole of last year, things were really looking down. I was worried I was going to eventually lose my job despite receiving two pay raises. As of the end of January, things are looking up again. I've actually been considering finding a new home or apartment. For the record, I currently live with my parents.
And there's that business cycle. If people like Ryan move out of the basement and start buying a house or renting an apartment and furnishing that and buying a TV for it and then everything begins to accelerate.
GEEWAX: Exactly. I think we have a lot of pent-up demand. You know, even when there's a recession, people - babies are born. People get married. You know, kids graduate from college. Eventually, people want to start to form households. And even if it's tough, even if it means you have to move, the economy is starting to move in the right direction. Again, fragile and uneven, but still, it's starting to look up.
CONAN: Marilyn, thanks very much for your time.
GEEWAX: You're welcome.
CONAN: NPR's senior business editor Marilyn Geewax with us here in Studio 3A. Coming up: As former Illinois Governor Rod Blagojevich arrives at his prison to serve a 14-year sentence today, advice from a fellow politician on life in minimum security. Stay with us for that. I'm Neal Conan. It's the TALK OF THE NATION from NPR News. Transcript provided by NPR, Copyright NPR.