This Just In
  • NFL approves Oakland Raiders move to Las Vegas by 2020. Financing for new 65,000-seat stadium includes $750 million in public money backed b
  • Lippman Connects and AMR International are launching an industry conference on data strategy. Transform debuts July 20 in Washington.
  • Transform complements AMR’s Data and Digital Event Strategy in London. Speakers are from inside and outside the exhibitions industry.
  • Detroit’s Cobo Center receives ASTM Venue Standard recertification, having first received certification in 2015.
  • Host to this year’s Sustainable Brands Conference, Cobo Center was the 9th facility in 2015 to receive ASTM Venue Standard certification.
  • Convention Data Services broke ground on its new corporate headquarters in mid-March. The approximate 30,000-sf building opens in Q1 2018.
  • The new digs are next to the current CDS HQ in Bourne, Mass. The construction will accommodate the company’s growth and create new jobs.
  • China’s Shenyang New World EXPO opened March 1, hosting 2 exhibitions in its first month of operation, with a third to be held 23-25 March.
  • To date, the largest event was a dental equipment and oral health exhibition, open 16-19 March, which drew more than 39,000 attendees.

Good Economic News
Clouded by Geopolitical Events

Darlene Gudea
, President / Publisher
August 1, 2014

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Oceanside, CA – The past month provided plenty of good economic news, but it has been overwhelmed by an outbreak of geopolitical warfare. As we go to press, right before the release of Second Quarter GDP, the data points to a solid rebound from the dismal First Quarter when the Gross Domestic Product (GDP) fell (2.9)%. However, Frank Chow, chief economist for Trade Show Executive Media Group, said prolonged geopolitical events often impact global economic performance, mainly through trade sanctions, rising energy costs, and uncertainty. If that happens, it may hamper growth in the second half of 2014. Fortunately, energy prices have been surprisingly stable and trade sanctions rather modest.

The good news first: the U.S. employment report for June was one of the strongest for the recovery. Non-farm payroll jobs rose by 288,000 — the fifth straight gain above 200,000. The unemployment rate fell to 6.1% and the intractable long-term unemployment rate (27 weeks or longer) fell sharply to a new low, though still less than halfway to its pre-recession level. More importantly, workers remained in the labor force. The participation rate held steady at 62.8% for the third month in a row. Moreover, at 59%, the employment-population ratio was little changed from the prior month. 

Unfortunately, the jobs added were mostly part-time, Chow pointed out. Full-time jobs last month plunged by 523,000, according to the Bureau of Labor Statistics (BLS). Meanwhile, part-time jobs soared by about 800,000. Wage growth stayed stagnant as hourly earnings gained 0.2% in June, bringing the year-over-year rate to 2.0%, which translates to declining real wages. However, Ray Stone, managing director at Stone & McCarthy Research, says a better gauge is Table B-9 in the BLS Jobs Report that accounts for the length of the work week and employment. This measure rose a more robust 4.6% in the 12 months through June.

So far, retail sales are rising at an annual pace of 4.3%, a level consistent with GDP growth of around 3% over the rest of 2014. Retail sales rose a meager 0.2% in June, a third of what Wall Street expected. “Yet the softness was limited almost entirely to auto dealers and home-improvement stores,” Chow said. “Sales were much stronger for most other retailers. Most economists believe it’s a one-month blip that will be quickly reversed.”

Other favorable economic news:

  • The Conference Board’s Leading Economic Index rose 0.3% in June, reflecting the fifth consecutive gain. Six of the ten indicators increased.
  • Citigroup analysts found that plans for 2014 capital expenditures from 700 companies have increased as the year has progressed. In December, nonfinancial companies expected an annual 1.5% increase in cap ex spending plans. By March, cap ex plans rose 5% and by 6.8% in June.
  • Industrial production increased 0.2 percentage points for June and 4.3 percentage points year-to-date led primarily by a pickup in oil and gas extraction. 
  • The Fed’s Beige Book in June reported overall lending activity has picked up across the country. About two-thirds of its districts reported rising loan demand, particularly in New York and San Francisco.
  • In July, the Fed’s Empire State Index and Philadelphia Manufacturing Index both surged.
     

Let’s get to the bad news. Major fighting has broken out in three countries:

  1. In Ukraine, pro-Russian separatists are attempting to overthrow the Kiev government. The conflict intensified when Malaysia Air flight 17 was shot down over Ukraine about 30 miles from the Russian border, killing all 298 people on board.
  2. In Gaza, the terrorist group Hamas is pounding Israel with over a thousand rockets bringing retaliation in the form of targeted air strikes. Israel has launched a ground invasion to destroy a maze of tunnels used by Hamas to infiltrate the country.
  3. In Iraq, a Muslim terrorist group called ISIS has conquered a part of Syria and much of northern Iraq and declared a caliphate. ISIS is threatening Baghdad and killing hundreds (mainly Christians) who refuse to submit to Islam or leave.

Besides these new hotspots, fighting continues to rage in Syria, Libya, Afghanistan, and parts of Africa. In the midst of this turmoil in oil rich countries, oil prices have remained unusually stable. “Consider that oil is trading at roughly the same levels as a year ago,” said Chow. “At the onset of each event, oil prices shot up, but retreated to prior levels within a week or two. With production declining in most oil countries outside the U.S., this is a tribute to the amazing development of the U.S. oil industry,” he emphasized.

“World oil prices are being curbed by U.S. production,” Chow pointed out. The U.S. oil industry has been transformed by the development of shale oil through advances in hydraulic fracturing and horizontal drilling. “The U.S. is now the world’s largest producer of oil and gas combined,” he said, “and in the top three of oil alone, alongside Saudi Arabia and Russia.” The ability of the U.S. to further impact future oil markets got a boost in July when the Obama administration exempted condensates, an ultra-light oil, from the 1975 oil export ban. “Many economists believe the government will allow more exceptions as U.S. oil production grows,” Chow said.

As for the rest of 2014, uncertainty may keep oil prices from dropping much below current levels, Chow noted. It has dropped below $100 a barrel a few times this year. “The potential for supply disruptions is much greater due to the accelerating geopolitical turmoil, which likely will not subside anytime soon,” he said. But the demand for oil remains quite uncertain as the global economy is fragile. Despite the good economic reports, consumers and businesses are just not spending at the same level as previous recoveries. It may take several months for these broad business trends to impact the trade show industry, but in the meantime, trade shows are reflecting good growth.