Sue Herera, co-anchor of CNBC’s “Power Lunch,” was the keynote speaker on Feb. 12 at the Greater Philadelphia Chamber of Commerce’s annual Economic Outlook event.
One of the first women to break into the world of broadcast business news, Herera earned the nickname, “The First Lady of Wall Street.” For more than two decades, she has provided viewers with a seasoned perspective on the major stories and issues moving the markets.
A founding member of CNBC, she helped launch the network in 1989. Well versed in the world of global economics, Herera has covered several of the major geopolitical summits held overseas. Her first book was published in 1997, Women of the Street: Making It on Wall Street—The World’s Toughest Business.
So her perspective on the future of the economy was sought at the Philadelphia Chamber event where, according to the Red Survey, members overwhelmingly report that they are optimistic.
Herera agrees that the economy has turned a corner.
“I think that businesses are growing at a somewhat slower, but much more sustainable pace than they were before,” she said. “Housing has definitely turned the corner. There are pockets of weakness, but I do think that we are in a much, much better economy than we were in 2012 certainly.”
Nationwide, Herera noted that she’s surprised that housing has rebounded as strongly as it has.
“I think that is a good thing, certainly, but I find it ironic that some people are talking about a housing bubble again because in certain sectors of the country housing is still weak. In general I think the recovery in housing has been incredibly bullish because it has such trickle-down effects into so many different industries. Part of the reason housing is recovering is because interest rates remain low.”
The reason interest rates remain low, she shared, is that pockets of economic weakness remain, mainly unemployment.
“But overall, I think the biggest surprise to me has been the strength of the rebound in housing. One of the surprises I think has been the continued investment in technology. When the 2008 financial crisis hit, we saw cash dry up. People were not investing in the stock market and they were not investing in businesses. That has changed quite dramatically. I think technology has seen the most inflow of cash and the most inflow of R & D investment, which in the longer term creates jobs and is very bullish for the economy.”
How will the continued investment in technology affect the region’s energy industry?
“I think the energy sector is key, particularly in the Greater Philadelphia area where you are blessed with the new shale technology, and other types of technology that I think are going to make a huge difference in the economy,” Herera explained. “They are going to create jobs and will help with energy independence on a national basis, which is incredibly bullish. If we can become energy independent within the next decade or so, I think that bodes incredibly well for the economy overall.”
And, she said, Wall Street doesn’t realize the power of the individual investor.
“Wall Street is still viewed as an insider’s game by many individual investors. Take a look at the Flash Crash on May 6, 2010 where the Dow Jones Industrial Average lost 1,000 points in several minutes (though it regained most of them before the end of the day). Or take a look at the rapid trading, the flash trading that goes on, the dark pools. Just the name “dark pools” is an indication that it’s not open to everybody. Well, that doesn’t create an even playing field for the individual investor and it creates the impression of an insider’s club.
“Then, when you do get insider trading going on and there are prosecutions, it reinforces the idea that Wall Street is not a level playing field for the little guy. I don’t use the little guy in a pejorative way. I mean for the individual investor—for myself, for my husband, for my kids.
“When I talk to people, I find that they don’t view Wall Street as a place to put their money. They would much rather start their own business, invest in themselves, and invest in a local business. They are using their money in a different way than they did, say, 10 or 15 years ago when everybody went into the stock market because that was how you grew your money,” she said. “That is not the way they want to grow their money anymore.”
Is that a negative for Wall Street?
“Maybe,” Herera said, “but I think that is a positive for the local economy. I think it’s a positive for innovation and I think it’s a positive for the business community. However, if we are going to have a strong financial system, you cannot alienate the individual investor.”
Last, but not least, Herera shared her thoughts on how the uncertainty surrounding healthcare is affecting business decisions.
“I think it is going to take a while to work out how health exchanges work depending what state you’re in, and how different states decide to adopt the healthcare initiative,” she said. “Businesses are going to take some time to work through what works best for them. Do I think that some people will keep their number of employees below 50 to avoid certain penalties or avoid having to be in certain programs? Perhaps.
“On the other hand, the economy becomes strong enough so you can justify bringing in more employees and justify that extra cost because your profit margins are rising faster than your cost are rising,” she noted. “Then I think it becomes less of an issue, but I’m not sure that you’ll know that for a year or so.”
To learn what the economic future of Philadelphia looks like, scroll down for more.
The Federal Reserve Bank of Philadelphia released results of its 2013 Economic Outlook for the region at the Greater Philadelphia Chamber of Commerce’s (GPCC) annual Economic Outlook breakfast on Feb. 12.
Overall results showed that companies are feeling optimistic about improvements in business conditions, employment, and revenue for 2013. However, challenges—including sales growth and employee benefits—remain.
The Chamber also presented results from its Dec. 2010, web-based survey of 207 GPCC members from across the Greater Philadelphia region.
“The survey showed a significant shift in how companies in the Greater Philadelphia region view their economic health. While undoubtedly challenges lie ahead, businesses are increasingly seeing green sprouts and are hopeful we are heading in the right direction,” said Greater Philadelphia Chamber of Commerce President and CEO Rob Wonderling, pictured above.
About half expected business conditions to improve for their company and sales revenue to be higher as well.
Survey participants also noted the most important problems their companies face:
- Poor sales (28 percent)
- Cost of employee benefits (16 percent said it is the most significant problem, and 18 percent said it is the second most important problem).
“The results of this survey indicate that we are on the mend, and I am pleased to work with such a respected partner as The Federal Reserve Bank of Philadelphia to conduct this important research,” said Richard J. Green, vice chairman and CEO of Firstrust Bank, which sponsored the survey.
“We are making progress,” said Jason Novak, senior economic analyst for The Federal Reserve bank of Philadelphia, “but there is still ground to be gained.”
About the Greater Philadelphia Chamber of Commerce
As the premier advocate for the business community, the Greater Philadelphia Chamber of Commerce works to attract, retain, and grow jobs for companies and residents of the region. We represent 5,000 member companies in southeastern Pennsylvania, southern New Jersey, and northern Delaware.
For more information, visit greaterphilachamber.com.