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TRENDING & SPENDING Continued from page 15 Sector Performance BEST PERFORMING SECTORS y Apparel y Automotive y Security y Business Services MIXED PERFORMANCE y Communications y Manufacturing y Medical y Government y Housing y Retail y Food SECTORS UNDER PRESSURE y Construction y Home Furnishings Economic Indicators Consumer Confidence dropped (4.8) percent- age points to 60.6 in August, the lowest level since November 2011, according to The Conference Board. Apprehension about job prospects drove confidence down. Core Inflation, which omits volatile food and energy prices, was minimal, rising 0.1%. Corporate Earnings for the S&P; 500 companies were surprisingly robust in Q2. The country's largest publicly traded companies reported their earnings rose 8.4% over 2011 levels. However, some econo- mists are forecasting a (2.0)% decline in Q3. Employment increased by 96,000 new jobs in August, well under expectations of 125,000 new hires. It remained well below the 252,000 average from December to February. Gross Domestic Product grew at an annual rate of 1.7% in the Second Quarter, down significantly from 2% in Q1, according to the Commerce Department. Housing Starts for single-family homes, which account for more than 70% of new residential construction, rose 5.5% to a pace of 535,000 units — the highest level since April 2010. Industrial Production fell (1.2)% in August after rising 0.5% in July. Hurricane Isaac restrained output in the Gulf Coast region. Interest Rates (short term) remained near 0% in September, maintaining the ultra-low level set in December 2008. The Leading Economic Index, a weighted gauge of 10 economic indicators that helps predict the future direction of the economy, zigzagged once again, dropping (0.1)% in August, following a 0.4% hike in July, after a (0.4)% drop in June and a 0.4% increase in May that came after a (0.1)% decline in April. Manufacturing in the U.S. contracted (0.2) points in August to 49.6, the lowest level in three years, according to The Institute for Supply Management's ISM Index. A reading below 50 signals a contraction. Retail Sales in the U.S. increased in August by 0.9%, the most in six months, boosted by demand for automobiles along with higher gasoline prices. The Unemployment rate fell slightly from 8.3% in July to 8.1% in August. y Technology y Hospitality y Transportation before robust growth can return: 1. Deleveraging is not finished. Americans lost an average of 40% of their wealth in the Great Recession and only half has been recovered. Consumers and governments still have too much debt. 2. Skills gaps continue to accelerate. A recent survey by Career Builder, an online career site, found nearly four out of ten employers are unable to find qualified candidates for open positions. 3. Regulations have skyrocketed and are adding more costs than benefits to the economy. 4. An aging and outdated infrastructure needs to be modernized and streamlined. "Many structures such as our electrical grid were started during the Industrial Revolution and resemble a patchwork quilt," Chow said. He said the federal government operates like a Byzantine Empire — for example the U.S. Postal Service, Amtrak, the IRS and the Depart- ment of Education. Income generated through technological advances and financial innovation has outstripped the archaic federal tax system. 5. Uncertainty is rampant and in need of leadership: the fiscal cliff, Obamacare, the federal debt ceiling, European debt crisis, slowing China economy, potential Iran-Israel conflict, raging Middle East uprisings. Te U.S. economy seems to be on a lifeboat adriſt at sea, waiting for someone to rescue it. Corporations have kept us afloat during the recovery, but don't expect them to surge back with a lot of jobs, Chow warned. "Even when profits were strong, companies didn't hire much," he said. "Now that profit growth has slowed, companies certainly won't create many more jobs during the last few months of this year." Sales and revenues have slowed considerably, and until the structural challenges are resolved, most companies will likely delay hiring or investing in capital or technology, he said. Trade show exhibitors are likely facing the same issues. The Irony about Housing Now we get to the main bright spot in the economy. "It's ironic that the industry which ignited the Great Recession may be 16 October 2012 | Trade Show Executive the one that keeps it from falling back into one," said Chow. A September cover story for Barron's highlights the recent surge in real estate. Te article by Jonathan R. Laing titled, "Happy at Last," gives a cautiously optimistic assessment that rising property prices are here to stay and many professionals believe the uptrend is sustainable for the foreseeable future. While the demand for housing is definitely on the uptick, Chow said that sales have yet to really take off like they did during most previous recoveries probably due to lack of jobs, the severe drop in net worth, the overhang of foreclosed homes and the plight of underwater homeowners. However, Chow said the government is finally employing some effective programs to unclog the foreclosure drain. Te single largest drag on housing is the over 11 million homeowners with underwater mortgages. Te availability of HARP 2.0, for underwater borrowers with loans sold to Fannie Mae or Freddie Mac prior to June 1, 2009 and FHA's streamline refinance, provide opportunity to refinance to lower payments or shorter term mortgages. Tis and other government loan modification programs are helping to prevent strategic defaults and future foreclosures. Moreover, Fannie Mae just sold 700 repossessed homes in Florida in a bulk auction for $78 million to a California firm, who will manage them as rental properties. Fannie Mae has another 2,000 foreclosures available for bulk auction in six states. Private equity firms and hedge funds have caught on and are scouring the country to buy foreclosures as rentals. Many banks are now agreeing to do short sales in masse to move inventory off their books. Bank of America did over 150,000 short sales last year. "Tese actions are preparing the real estate market to lead the economy again — it just may take a few more years," said Chow. "Housing employment has led the economy out of the five prior recessions except for this one. If we ever do get a revival in jobs, there's an excellent chance housing may lead a real recovery again," Chow said. Trade show managers can expect this sector to improve in 2013. TSE SPONSORED BY