Uncertain About the Economy? You’re Not Alone

By Scott Costa, Publisher, tED magazine

The one topic I am repeatedly asked about when talking with NAED members is the economy. What have I heard? What am I reading? How will the presidential election impact the economy?

I have been going over a variety of research for a while, and like many of you, every time I see that the economy is going to be fine, I find something else that says it’s not. It doesn’t really answer the question, but it at least helps with the strategy.

tED magazine’s latest Baird Research on the economy takes a close look at what to expect during the third quarter of 2016. Our results come from 140 NAED members, with a fairly even split by region (37 percent of the responses from the Midwest, 23 percent from the South, 17 percent from the Northeast, 15 percent from the West, and 5 percent International). Combined, the respondents have more than $15 billion in annual revenue.

Their responses show a somewhat flat 2Q for 2016, with revenue on the electrical side up 0.3 percent compared to 2Q 2015, and up 3.6 percent on the Datacomm side. However, the outlook for 3Q is much better. Revenue on the electrical side for 3Q is expected to be up 2.3 percent compared to 3Q in 2015, and up 4.2 percent on the Datacomm side.

And that would be great, until you read the comments by some of the respondents.  On the commercial construction side, the news is positive. “The commercial construction market is still very strong and backlog will continue to build for at least the next four quarters,” one distributor wrote. “We have seen a significant increase in backlog and expect a strong finish to 2016,” wrote another. On top of that, we are also seeing strong results in LED lighting, where one distributor wrote, “There will be strong demand for LED lighting retrofits through the end of the year, due to stronger acceptance and possible utility rebate levels dropping. Many suppliers in the game are keeping margins low, but volume is strong.” Another wrote, “Lighting continues to lead the way in sales.”

Unfortunately, that’s not the end of the survey. When it comes to revenue growth, our respondents said, “Oil prices… have had a dramatic effect on sales,” and “Margins will be going down as we chase the chain stores.” On top of that, there are still strong concerns about the industrial market, where there is some hope, but “Revenues impacted by dismal industrial marketplace. Commodities not helping. Tough stuff,” was one of the responses. Another said, “We haven’t reset our budget, but a weak May got us really looking at it.”

Like I said, it’s a tough economy to predict.

Rather than wait and be reactionary, it’s important that tED magazine and tedmag.com provide you the help and information you need as we move forward.  For the past few years, we have been providing you best practices on a number of topics, including innovative strategies, B2B e-commerce, recruiting and retaining your top employees, ways to have marketing and sales work together to increase sales, pricing value added services, and new technologies (especially in lighting) to help you increase your market share.  We provided that information during a time when the economy was fairly solid.  Now that there is some uncertainty, this is the time to make sure you are using those practices to continue to grow.

Over the next few months, tED magazine is planning to update those best practices as a way to provide help during an uncertain time.  If you have a topic that you would like us to help you with, feel free to contact us.  One thing we thought was essential over the past few years was to find the best experts in all of these fields, and use them as our sources for our stories. Not just the average person with a blog or podcast, but industry-leading men and women who are highly sought after for their advice and best practices. They have agreed to work with us as we sail through this uncertain economic ocean.

Our next Baird Research study, which focuses on the 4Q for 2016, is set to go out in the next couple of weeks.  If you receive the survey, please take a few minutes to fill it out.  The more responses we receive, the more accurate the results.  We will share them with you as soon as the study is complete.