Those Who Know Business in Elmhurst Ponder the Economic Impact of the 2012 Election
To spend or not to spend? Opinions vary widely.
New businesses have been popping up in Elmhurst at a fairly good pace over the past year or so. Most seem popular—wildely popular, even, like the new Elmhurst Mariano's expected to open in spring 2013.
But other economic signs tell a different story. For every new shop that's opened, another has closed, including a trio of bakeries: Julianne's, Heavenly Cupcake, Bleeding Heart. And, the stalled Hahn Street project for the past six years has been tweaked, postponed, moved into a new TIF district, sent back to the drawing board and now is being evaluated by experts to determine its best use. Consultants say apartments should go there. Some Elmhurst aldermen aren't thrilled with that assessment.
So, we're fresh off a presidential election that basically re-seated the same commander in chief and resulted in the same balance of power in Congress. Locally, Illinois voters strengthened Speaker Michael Madigan's control in Springfield. What does all this mean for new and established Elmhurst businesses? The answer varies widely, depending on which Elmhurst businessperson you ask.
Frank Catalano Jr., Catalano & Associates
Frank Catalano is president of a local real estate management company and has been in the business for decades.
Four years ago, when Barack Obama was elected to his first term, the economy began to change, Catalano said, and it took two to three years for business owners and individuals to get used to the new normal.
"So, you're finally starting to feel good that you can still make a living, still do what you need to do," he said. "For myself and my friends, we've had to revise our lifestyle, let's face it."
But now, days after Obama is re-elected, questions swirl about the looming "fiscal cliff," unknown elements of the Affordable Healthcare Act and other wild cards, he said.
"Now, all of a sudden, you're going to have another whole set of issues coming up and I don't know if that's good, bad or indifferent. Nobody knows. I haven't seen a plan that says, OK, here's what we're going to do."
The unknown is keeping some business owners in a holding pattern. Catalano says he knows of business owners close to retirement age who really don't need to keep working, but do so for the enjoyment and to provide jobs for others.
"They're throwing up their hands and saying, 'You know, I've got enough money. I'm doing this because I like coming into the office, I enjoy working. But I don't need to sit here with all this risk if I'm not making any money anymore.' "
He said he has a lot of projects on the table, and "now we're reviewing everything."
"If the Republicans went back in, I knew we were ready to pull the trigger on a couple of decent projects in Elmhurst. Now, I need to see what the tax consequences are. Am I going to invest money in a project that I'm not going to get a return on? I might as well just sit back and wait."
It's going to take some bipartisan work in Washington, he said.
"Unless our president reaches across the aisle, gets everybody on the same page and starts leading instead of following polls, it's going to be a tough haul," he said.
Catalano is cautiously optimistic.
"My first reaction is, this is the hand we were dealt. Now we just need to figure out how to make money under this new situation."
He said he doesn't feel overly impacted by state and local governmental issues.
"We're concerned about property taxes continuing to increase because we own a lot of real estate," he said. "But that's really the only (local business-related) concern I have right now."
John Quigley, Elmhurst Chamber President, CEO
With the same president in office and the same balance of power in Congress, John Quigley foresees no dramatic change in the business climate due to the national election.
"A bigger impact in terms of Illinois business might be the situation in the Illinois House, now that there is a veto-proof majority," he said. "It strengthened Speaker Michael Madigan's control in Springfield, and now it's yet to be seen whether work can be done to eliminate the state's huge budget deficit."
The state is $9 billion behind in bill payments—even with a major income tax increase—and $80 billion behind in pension funding, he said. Workman's compensation also has to be revisited to lower the cost to businesses, he said.
But in Elmhurst, businesses that had been awaiting the results of the presidential election are now ready to move forward, Quigley said. Businesses that will be impacted by Obamacare have already been planning for it and have put mechanisms in place to implement it, he said. Manufacturing has been bouncing back at a 6 to 7 percent rate per year, he said.
"Caterpillar, John Deere, they're doing really well," he said. "We're shipping tractors and cranes, front-end loaders and dump trucks all over the world for construction projects."
The auto industry and its related industries also are doing well, entrepreneurship is growing, women-owned businesses are growing, consumer confidence is up and that mirrors the national trend, Quigley said.
"Those are all good indicators," he said. "Even in a down economy, there are opportunities available.
"I've had businesses tell me this year was their best year in a decade, let alone their best year since the downturn. There are still horror stories out there, but the reality is, businesses fail on a regular basis whether the economy is good or bad."
Jason Janes, Financial Advisor, Edward Jones
What does Jason Janes tell his clients? The investment world is dictated more by corporate profits than political posturing.
"As we measure the profitability of the S&P 500, collectively (those businesses) have never been more profitable," he said. "We think corporate earnings or profitability is the tail that wags the dog."
There is no way to figure out how political compromises, necessary to make progress, will shape businesses, he said.
"Everything is in proposal (phases) now and they have a lot of work to do, but as it relates to advising clients, we have to take what's guaranteed and what's certain out there."
And, that is?
Markets had a great year under the same president some people are now worried about, the S&P 500 has never been more profitable and companies have a lot of cash on hand they are starting to spend, he said.
Actual indicators show when corporations have money on the balance sheet, they either pay it in the form of income or dividends, they build infrastructure, or they hire people, he said.
"Any of those are great options" for business, Janes said. The first sign companies are loosening up their purse strings is mergers and acquisitions, which have been occurring more over the last two quarters, he said.
"Companies are saying there's opportunity here to acquire either a strategic partner or a smaller company that gets them into a niche that they previously didn't have exposure in," Janes said. "I'd say the most common area that's happening in is biotech—nanotechnology—as well as technology.
"Google is one of those companies that said, 'What are we going to do with all this cash? They decided they want to compete in the wireless phone business, and they can do that effectively (by partnering with Motorola)."
On a personal level, Janes said his business has never been better.
"Three of the past four years have been three of my best years in business in 11 years," he said. "So I'd say, yes, we're heading in the right direction. And with almost no change whatsoever in Washington, D.C., I don't think (the election) will derail us. Hopefully, we're on the road to the right place."