2013 Could Be The Turnaround Year

GROW logo

The Great Recession began more than five years ago now (December 2007). It also ended more than three and a half years ago (June 2009). Yet some 12 million Americans are still looking for a job, and millions more would say it hasn’t felt like much of a recovery at all, including folks who have seen their incomes stall or have been drowning in mortgage debt for years.

Since the start of 2010, economic growth has averaged 2.2 percent, which would be just fine in normal times but is less than stellar considering the starting point was a time of mass unemployment and general economic despair. The nation is poised to approach the fourth anniversary of economic recovery this coming June with an output gap — the difference between what the economy is capable of producing and what it is actually producing — approaching $1 trillion.  

It will take a few years of real growth, at least 3 percent, to change that dynamic, and the stars are aligning for 2013 to be the beginning of a period of above-average growth. Let’s consider the factors that have been holding things back, and why those headwinds may finally be fading.

Factors Limiting Economic Growth

Housing Starts And Sales
The biggest hindrance for the economy the last few years has been the housing sector, with sales near-historic lows for half a decade. At first, this was a necessary adjustment in order to work off the overbuilding of homes during the 2000 to 2006 housing bubble. But we are far beyond that point now due to the significant under-building of homes in recent years relative to demographic trends. Even when adjustments are made for the lower-than-normal household formation during the recession and its aftermath (i.e., college graduates opting to live in their parents’ basement instead of getting an apartment), it is still less-than-awesome growth.

One day, this mismatch of too few houses being built relative to the number of people who need a place to live will be resolved, and that day seems to be approaching. Housing starts increased 28 percent in 2012 (initial estimate). This is a solid year-over-year increase, and residential investment is now making a positive contribution to gross domestic product (GDP) growth. Even after increasing in 2012, the 780,000 housing starts this past year were the fourth lowest on an annual basis since the Census Bureau started tracking starts in 1959 (the three lowest years were 2009 through 2011). Starts averaged 1.5 million per year from 1959 through 2000, but demographics and household formation suggest starts will come close to doubling this year from the 2012 level.

Residential investment and housing starts are usually two of the best leading indicators for the economy. Nothing is foolproof as a leading indicator, but if these trends follow precedent, this suggests the economy will continue to grow over the next couple of years.

Another positive statistic worth noting is that, to date, the increase in construction jobs has not matched the increase in home-building activity. In fact, for the year ending in November, the number of residential construction jobs actually fell by 5,000. It is a bit of a conundrum as to why, but one sure thing is it can’t go on forever.

If building activity continues to rise, construction companies will need more workers, and this is low-hanging fruit for the labor market. The unemployment rate among construction and excavation workers was about 13 percent as 2012 came to a close. Putting construction workers back to work building new houses and apartment buildings for a growing population is just what this economy needs.

Decreasing Debt
Another factor constraining economic growth has been household debt. American consumers, as we have often heard in the media, have been weighed down by the debts they incurred during the boom years, including credit card bills, student loans and burdensome home mortgages.

The good news now is that, through a combination of their own efforts to save money, low-interest rate policies from the Federal Reserve and the attrition from defaults and foreclosures, Americans seem to be further along their deleveraging path. The ratio of household debt to GDP has fallen from a peak of 98 percent at the start of 2009 to 81 percent in the third quarter last year, which is about the level it was in 2003 — still not good but heading in the right direction.

Because of low interest rates, the cost of servicing debt is down even more. The ratio of household debt servicing costs to after-tax personal income was down last year to nearly its lowest levels on record. The Fed’s policy actions have brought down rates on credit cards and auto loans, and more people have been able to refinance their mortgages as home prices rise. Americans’ household balance sheets are looking as good as they have in a decade, which means that as 2013 begins, debt overhang no longer looks like the dark cloud over the economy it once was.

The Government’s Contribution
Among the persistent drags on the economy throughout this weak recovery are state and local government budget woes that have precipitated slashed spending and job layoffs. These initiatives have counteracted federal stimulus efforts with fiscal anti-stimulus measures of their own.

From 2000 to 2008, state and local governments added an average of 226,000 jobs per year. Since 2008, as states struggled to balance their shrinking budgets hampered by lower tax revenues and higher spending on social welfare needs, the sector has cut an average of 154,000 jobs per year. However, they may finally be through the toughest part of that adjustment process. With tax revenues climbing and major budget-cutting already completed, state and local government employment seems to have bottomed out and has been on a gentle upswing. Don’t look for this sector to be a major driver of hiring, but by ceasing to be a negative, it could fuel the potential for better growth in 2013. Barring any foolish post-fiscal cliff policy gaffes by our national government, we will likely be looking at a decent year.

Topics:

Leave a Reply

More From Grow Initiative...
Feature image The 2015 Perennial Plant Of The Year, Geranium x cantabrigiense ‘Biokovo.’

August 27, 2015

The Perennial Plant Association’s Regional Symposium Will Be This October In Dallas

The Perennial Plant Association plans to hold its Regional Symposium October 5 in Dallas, Texas, in conjunction with the All-America Selections/Home Garden Seed Association's Summer/Fall Summit held October 5 to 8.

Read More
september_grow_rodale institute

August 25, 2015

Hospitals Are Getting Into The Organic Food Business

Growers investing in the organic food movement could serve a growing new area with vegetable transplants and starts, as well as produce, as hospitals begin to prescribe healthy diets and nutrition, and even go so far as to grow their own food. As part of a new phenomenon among progressive hospitals, health professionals are beginning to realize that without health and nutrition, programs and techniques may be done in vain or worse — obsolete. As more patients seeking a healthy diet turn to nutritionists, who recommend sugar-free, alkaline diets to prevent disease and aid in recovery, hospitals recognizing this trend are taking action. St. Luke’s Hospital in Bethlehem, Pa., recently contracted with the nearby Rodale Institute to manage an organic farm, established in 2014. The hospital, part of a six-campus network, aims to provide excellent healthcare, part of which includes educating patients about the benefits of a plant-based, organic diet. […]

Read More

August 21, 2015

Proven Winners Announces Roadshow Events For 2015

Proven Winner's Roadshow Events, held across North America, provide growers and retailers with the opportunity to learn how to grow Proven Winner's newest varieties and receive information about industry trends.

Read More
Latest Stories
september_grow_rodale institute

August 25, 2015

Hospitals Are Getting Into The Organic Food Business

Growers investing in the organic food movement could serve a growing new area with vegetable transplants and starts, as well as produce, as hospitals begin to prescribe healthy diets and nutrition, and even go so far as to grow their own food. As part of a new phenomenon among progressive hospitals, health professionals are beginning to realize that without health and nutrition, programs and techniques may be done in vain or worse — obsolete. As more patients seeking a healthy diet turn to nutritionists, who recommend sugar-free, alkaline diets to prevent disease and aid in recovery, hospitals recognizing this trend are taking action. St. Luke’s Hospital in Bethlehem, Pa., recently contracted with the nearby Rodale Institute to manage an organic farm, established in 2014. The hospital, part of a six-campus network, aims to provide excellent healthcare, part of which includes educating patients about the benefits of a plant-based, organic diet. […]

Read More
3D Green Printer

August 11, 2015

3D Printers Sprout Living Designs

Project PrintGREEN is turning 3D printers into on-demand gardeners after designing a “green” 3D printer in 2013. The printer produces living prints, printing customized objects in a variety of sizes and forms. The project was created at the University of Maribor in Slovenia, with a goal to unite art, technology, and nature, creatively producing living designs with the help of technology.

Read More
Roots To Re-Entry’s ornamental plant nursery donates plants to local community gardens

August 4, 2015

Roots To Re-Entry Transforms Lives

An inspired employment initiative takes green-job training behind prison walls to help inmates find jobs in urban agriculture and the landscaping industry upon their release, and along the way, it is changing lives for the better. The Roots To Re-Entry (R2R) job training program, conceived by the Pennsylvania Horticulture Society (PHS) and its partners, does more than teach inmates of the Philadelphia Prison System the skills they need to find meaningful employment; it also teaches them invaluable life skills. The PHS staff leads participants through a 16-week course that includes hands-on projects designed to teach them horticultural skills and provide them with training in landscape maintenance and greenhouse growing. In addition to English and math, the nonprofit Federation of Neighborhood Centers (FNC) offers supplemental courses in health education and employment preparedness. Upon inmates’ release from prison, the FNC assists R2R graduates with the transition to life outside prison walls by […]

Read More
USDA Logo

July 15, 2015

USDA’s 2014 Floriculture Crops Summary By The Numbers

The U.S. Department of Agriculture released its 2014 Floriculture Crops Summary in June. Here are some of the highlights: The total crop value at wholesale for the 15-state program with $10,000 or more in sales is $4.07 billion, compared with $4.25 billion in 2013 The percentage wholesale value of floriculture crops is down 4 percent from the 2013 valuation There are 4,849 producers for 2014, down 21 percent in the 15 states, compared with the 2013 count of 6,115 2,510 of producers had sales of $100,000 or more in 2014, down 5 percent from 2,632 in 2013 733 million square feet was the total covered area for floriculture crop production in 15 state area evaluated in 2014, down from 735 million square feet in 2013 $1.82 billion was the wholesale value of all bedding and garden plants, including herbaceous perennials, representing 46 percent of the value of all reported crops The wholesale value for […]

Read More
LuxFlora logo feature image

July 5, 2015

Luxflora Wants To Create A Lifestyle Movement

A new organization for women in horticulture plans to take on some of the industry’s toughest marketing challenges by promoting the use of flowers and plants in everyday living.

Read More
AmericanHort_HortScholars

June 23, 2015

AmericanHort Announces 2015 HortScholars

AmericanHort has selected six students from across the country to serve as this year’s HortScholars. This rigorous, competitive application process identifies some of the industry’s brightest professionals and helps to launch their careers in horticulture by providing education and networking opportunities. The goal of the HortScholars program is to provide students with an enriching professional development experience that increases their knowledge, industry awareness and career enthusiasm. 2015 HortScholars: • Sarah Leach Smith, University of Delaware • Bobby Nance, Virginia Tech • Madeline Olberg, Purdue University • Nick Sobecki, Ohio University • Emily Teng, University of Hawaii • William Yoho Jr,, Ohio State University Agricultural Technical Institute HortScholars will be on-site at Cultivate’15 (July 11-14 in Columbus, Ohio) and receive complimentary Cultivate registration, lodging and meals. Additionally, they will receive a complimentary one-year AmericanHort membership. On-site at Cultivate’15, HortScholars will assist the Generation Next Community with events, conduct presentations that share […]

Read More
July 2015_GROW Perspective_Katie Ketelson

June 23, 2015

MegaMashups Take Plants To The People

It’s no secret I love plants. It’s probably not much of a secret that I love beer, too. And in my perfect world, I’d have a permanent beer garden decorated with galvanized containers stuffed full of flowers, high-rising arches of hops and endless rows of hydroponic strawberries for everbearing enjoyment. But all that costs mega money, so I’ve settled (for now) on orchestrating mega mashups focused on my loves mentioned above, striving to reach an audience that doesn’t even know our industry exists. I’ve long preached about how we need to go to the people. Meet them on their turf, so-to-speak. We can’t expect Gen X or the Millennials, or heck, even my parents, to walk into our garden centers on a whimsy. And frankly, why would you want to be so passive? Your customer spends their extra dollars at the coffee shop, at the mall and at the bar. […]

Read More
Michigan State University’s Bailey GREENhouse Sells Produce And Tea To Campus Dining Facilities

June 20, 2015

Michigan State University’s Bailey GREENhouse Sells Pro…

A greenhouse operated primarily by Michigan State University (MSU) students has begun exploring new crops, including herbs, to produce a line of tea. The Bailey GREENhouse, completed in 2012, gives students from MSU’s Residential Initiative for the Study of the Environment (RISE) the opportunity to experience hands-on learning about organic growing methods, composting and the food cycle. The greenhouse, which was built in partnership with Residential and Hospitality Services, the Department of Community Sustainability, RISE and the Student Organic Farm, is a passive solar hoop house intended for the production of certified organic culinary herbs and salad mixes. Students plant, grow and harvest herbs and microgreens using soil from university composts. All of the produce is certified organic, and is sold to MSU dining facilities, including Brody Square, The Gallery at Snyder and Phillips Halls, the McDonel test kitchen and the Kellogg Center Hotel & Conference Center. The new tea line […]

Read More
Sporticulture Offers A Way For Growers To Promote Plants And Football

June 20, 2015

Sporticulture Offers A Way For Growers To Promote Plant…

Cortland Smith, the president of Walnut Springs Nursery in Glenwood, Md., has two passions: plants and sports, specifically football. Earlier this year, he found an opportunity to blend them together in a way he hopes will benefit the entire industry. This past spring, Smith launched a company called Sporticulture, Inc., which provides access to sports licensing and marketing opportunities to growers, retailers and landscape contractors. The company’s first partnership is with the National Football League. Working through Sporticulture, growers will have the ability to produce team color plants in officially licensed NFL containers and tags. “Walnut Springs is a grower first and foremost, and Cort wants a program to benefit growers and give them the opportunity to add profit margins and sell plants at a higher price utilizing the power of the NFL brand,” says Pete Gilmore, director of business development at Sporticulture. “We are encouraging growers to utilize their […]

Read More
Urban Gardens

June 19, 2015

Urban Gardens Feed The World On A Local Level

Growing food in small spaces and urban gardening go hand in hand, no surprise there. But the fact that there are 200 million urban farmers worldwide, supplying food to 700 million people may be a startling revelation to those who equate food production with large rural farms. According to a fact sheet report from the Food of Agriculture Organization of the United Nations entitled “Feeding Cities, The Role of Urban Agriculture,” the 700 million people urban farmers supply with produce accounts for 12 percent of the world population. Aside from the obvious benefit of helping to feed a burgeoning world population, urban farms, the newest trend in a greener future, are a source of revenue for under- or unemployed residents. They also provide on-the-job youth training and community education and shorten the journey from farm to plate. And the benefits don’t end there. Urban farms may be small, but they have […]

Read More
american-hort-logo

June 18, 2015

Introducing SHIFT: An AmericanHort Initiative

AmericanHort, along with its research affiliate the Horticultural Research Institute (HRI), introduces SHIFT: An AmericanHort initiative. This innovative research project takes a hard look at the future of the industry. What was once announced as the “the future of retail” research project isn’t just about retail anymore — it’s about how the collective industry can rise to the challenge of meeting modern and future consumers’ expectations. This research demands a shift in strategies, thinking and paradigms. It forces us to think and to ask ourselves, “What if we started doing things differently?” SHIFT is the largest research initiative of its kind for the industry. The resulting data, insights and recommendations paint a clear picture of opportunity for all industry businesses to capitalize on trends and even get ahead of the curve. SHIFT is the future of consumers, the future of retail, the future of the supply chain and the future […]

Read More
AFE young professionals council

June 17, 2015

AFE Launches Young Professionals Council

The American Floral Endowment (AFE) has established the Young Professionals Council (YPC), which consists of 21- to 35-year-old students and professionals in the floral industry. YPC members will use their skills and strengths to help reach other young professionals interested in becoming leaders in the floral industry, provide guidance and feedback on AFE’s programs, and get involved in leadership and learning opportunities through AFE’s programs. “There are crucial industry challenges that need to be addressed, and the YPC is a significant program that I believe will help benefit the industry. I look forward to working with the driven young members of this group to help spread awareness of AFE and build a stronger future,” says AFE trustee and YPC board liaison Dwight Larimer. Current members include: • Tha Cha, grower at Cha Veggies • Joshua Craver, Ph.D. student at Purdue University • Eric Fernandez, director of mass markets and business […]

Read More
growing for futures logo

June 15, 2015

National Garden Bureau To Offer Grants To Therapeutic G…

National Garden Bureau (NGB) will grant $10,000 this fall to be split among three therapeutic gardens in North America as part of an ongoing effort to raise awareness of horticulture and support the benefits of gardening. After fundraising for a vocational therapeutic garden in Chicago last year, NGB is expanding its support of gardens that promote the health and healing powers of human interaction with plants. Beginning this month, NGB will begin accepting applications from therapeutic gardens that meet the following set of criteria: 1. Have a defined program using the garden to further particular goals for participants lead by a qualified leader. Examples include horticultural therapy, occupational, physical, vocational or rehabilitation therapy in a garden setting or using gardening to promote positive social relationships within a community. 2. Offer a nature experience/interface for population served, including, but not limited to veterans, special-needs children or young adults, the elderly and/or those […]

Read More
James_featured

June 3, 2015

A Wait-And-See Approach To Variety Selection Serves The…

Greenhouse Grower’s Medal Of Excellence For Industry’s Choice panelist James Russell of Armstrong Growers discusses standout varieties from 2015 California Spring Trials and explains how his team decided on the plants that would be chosen for production at their operations. Team Armstrong included myself, Production Manager Heather Hydoski, Desert Operations Manager Anthony Pytel and Sales Manager John Mellon. We make variety selections for our own trials during this event that will ultimately make the actual changes in the programs we offer our customers. Over the years, we have learned to hold back and wait to see how plants perform in the ground before we make any additions or deletions. Many new plants stand out and tempt us to jump into full production, and, yes, we still break the rule occasionally in the name of getting a plant out before our competition does. We feel our customer should not be the test case, […]

Read More
Amy Daniel with daughters

May 20, 2015

Fall Creek Farm & Nursery’s Amy Daniel Suppor…

Amy Daniel, marketing and brand manager at Fall Creek Farm & Nursery, has a passion for marketing and branding that led her into the green industry early in her career, when she and a friend started their own agency, and she began helping her parents — then owners of a retail nursery — with marketing services. Daniel’s career in the field started in the 1980s, after she finished college with degrees in journalism and advertising. It wasn’t long before she began to feel frustrated with the status quo in the industry. She and a friend from college, agreeing there was a better way to do things, decided to start a business. “I guess now looking back, we were probably young and naive, but it all worked out really well,” Daniel says. “We started our own advertising agency/marketing and PR firm. I ran that for two decades. It was very successful.” […]

Read More
susie raker featured

May 12, 2015

Manage Costs To Increase Profitability

Business profitability and health is about more than just sales. Growers can get in trouble when they don’t look at the complete picture when it comes to cost accounting. Susie Raker Zimmerman shares how the team at C. Raker & Sons keeps costs and profits in check.

Read More
Suzi McCoy with GM Logo

May 6, 2015

Garden Media Group’s Suzi McCoy Urges Women In Horticul…

When Susan McCoy, owner of Garden Media Group, started promoting roses and shrubs for The Conard-Pyle Co. (Star Roses and Plants), she knew the horticulture industry was the right place for her. What she didn’t know was how much the journey would reshape her business for the better. Now, she encourages women in horticulture to invite others to be a part of the industry.

Read More
indoor-vertical-farm

May 5, 2015

World’s Largest Indoor Vertical Farm To Be Developed In…

A former industrial site in the Ironbound community of Newark, N.J., will be redeveloped into the world’s largest indoor vertical farm. The $30 million project was recently announced by RBH Group, Goldman Sachs Urban Investment Group, Prudential Financial Inc. and AeroFarms, in partnership with the City of Newark and the New Jersey Economic Development Authority (NJEDA). The vertical farm will serve as the global headquarters for AeroFarms. “We are excited to redefine not only the Garden State but also agriculture overall,” says David Rosenberg, CEO for AeroFarms. “Partnering with RBH, Goldman Sachs, Prudential, the City of Newark and NJEDA allows us to bring our global headquarters and the world’s largest indoor vertical farm close to where the consumer is, offering a fresher, more nutritious and delicious product while also creating jobs in the community.” According to Ron Beit, founding partner and CEO of RBH Group, AeroFarms will anchor its broader Makers […]

Read More