Beauty Store Business

JAN 2015

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46 January 2015 | might unexpectedly call in their loans. Retailers are fairly busy building additional stores, hiring more people and increasing hours. I see a continuation of that trend." Big employers are looking at more investment in 2015 partly because they seem to have reached the limits of what they can squeeze out of their current assets. "Businesses are approaching a point when they can no longer increase profits by just cutting costs," says Koro- peckyj. "They need to take chances, introduce new products, expand to new markets, enter new partnerships or fund bold, new ideas. Recessions typically make businesses reluctant to take such risks. However, with the recession more than five years in the rearview mirror, times don't feel as scary." Reports from the field corroborate an improving out- look for business. "Sales continue to see a positive trend in the near future for manufacturers and backlogs have recov- ered with new orders either stable or increasing," says Tom Palisin, executive director of The Manufacturers' Associa- tion (, a York, Pennsylvania- based regional employers' organization with more than 350 member companies. "With the continued positive growth of the United States' GDP, the domestic markets for manufacturers will continue to see growth opportunities." LOOMING CLOUDS Unanticipated events may affect the eco- nomic forecast. Interest rates, for example, may rise when the Federal Reserve kept them low to help spur the economy. In the best of worlds, that might actually stimu- late the economy. "There might be an advantage to the Fed's letting interest rates rise or at least to signaling they might move that direction," says Simson. "It might incite consumers who jump to get new homes in the belief interest rates would go up." More home buying could only be to the good—and not only because it leads to more construction activity. "After people buy homes they buy furniture, pools and spas, floor cov- erings and patios," says Simson. "That goes on for two or three years after the house is purchased." Of course, too high of a spike in interest rates would have a negative effect on housing. "The biggest threat to the outlook would be a repeat of what went wrong in 2014," says Hoyt. "That would be if housing markets do not gather momentum and we do not get the anticipated construction and jobs." More risks abound. Consider another meltdown in the financial sector: "I am not convinced that the banking system is any better today than in 2008," says Simson. "That could be a danger." Yet the biggest risk, says Simson, might be that one of the world's many severe problems—the Middle East, ter- rorist activity, the softening economy in Europe or the spread of Ebola—might blow up and create the next economic disruption. "It's a dangerous world," says Simson. "The risk is that something bad happens that makes people stay home and watch TV rather than go off and do business. You have to wake up every day and pray that does not happen." TEA LEAVES "Among the most important trends to watch will be how much labor market slack is absorbed and how quickly," says Koropeckyj. "Will the labor market tighten? And will that affect wages in a way that encourages consumers to open their wallets at retail stores?" A second factor is the willingness of banks to lend. "Improved mortgage credit availability will be the key in enabling the housing market to take off," says Koropeckyj. And keep an eye on the employment numbers. "People will be looking for continued job growth in early 2015," says Simson. "If they see it, they will think things are going well. If job growth is not there, people will be worried that something is amiss." ■ Phillip M. Perry is a New York City- based freelance writer.

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