14 FABRICARE FE ATURE said John Manzella, a speaker on global business and economics, and CEO of World Trade Center Buffalo Niagara, an international business development organization based in Western New York. “We actually need more agreements for free trade, which is extremely beneficial to the U.S. economy.” At least there has been no recent talk about a border adjustment tax, notes Manzella. “That would result in many lost jobs. While the president has focused on the trade deficit, we need to realize that more than half of imports represent intermediate goods used in the production of U.S. products. This makes our goods more competitive around the world. Imports also reduce prices and stretch the consumer dollar.” HOUSING STRUGGLES Housing activity, a key driver of economic growth and consumer spending, is bringing up the rear. “Housing starts remain disappointing,” said Koropeckyj. Moody’s expects 2017 starts to increase by 5.17%, to 1.24 million, when numbers are finally tallied. That’s lower than the expected 1.64 million, and represents a rate of increase noticeably below the 6.34% increase clocked in 2016. The culprit? Neither demand (which is robust) nor credit availability (which is strong). Instead, a tight labor market has limited the capacity for new construction. Furthermore, it’s expected that a good portion of available workers will be siphoned off for the reconstruction of buildings damaged by Hurricanes Harvey and Irma. Put it all together and it means a substantial backlog in the construction of single-family homes and apartments. Despite the downside risk of labor shortages, Moody’s forecasts a robust 26.11% increase in 2018 housing starts. “The combination of increased housing permits and reconstruction in the aftermath of Harvey and Irma will keep demand for housing starts at a hot burn,” said Koropeckyj. FINANCIAL RISKS Finally, business owners should keep a watchful eye on the health of the banking industry. “I continue to worry about the strength of the financial system,” said Simson. “When the value of assets such as the stock market and real estate goes up, that usually means there is too much easy money in the system.” The nature of the nation’s increasing debt loads also worries Simson. “Student loans, credit card debt, and longer-term auto loans are continually increasing,” he said. “So are derivative-backed CDs, which carry high rates of return and carry higher risk than many people realize. Finally, we are also seeing the bundling of loans that got us into trouble in 2008.” The end result? “Maybe some lenders have too many high- risk loans on their books,” said Simson. “If they cannot collect, the whole banking system will again be at risk.” RUNNING START In the early months of 2018, some key indicators could offer clues to the year’s economic trajectory. First, said Hoyt, keep an eye on what’s happening in Washington. “Will there be a program of fiscal stimulus? If so, that will bolster the economic environment.” He also suggests staying alert to reports of wage increases that would stimulate consumer spending. A favorable operating environment can provide the opportunity to strengthen internal controls. “When you foresee a year of steady economic growth, it’s time to take the opportunity to look inside the walls of your organization and determine how you can improve your execution, your strategies and your financial systems,” said Simson. “Make sure you understand your costs and are ready to react quickly to changes in the market. As for employees, go for the ‘A Players’ rather than settling for the ‘C’ ones.” In all cases, said Simson, emphasize stronger internal operations. “Batten the hatches. Keep asking yourself, ‘How can I strengthen my organization for the long term?’” Phillip Perry is a freelance writer based in New York. continued from page 13 Batten the hatches. Keep asking yourself, ‘How can I strengthen my organization for the long term?’ -WalterSimson,Principal, VentorConsulting,Chatham,NewJersey