The double whammy of the Great Recession witnessed entire sectors laid low coupled with tight money that eliminated the ability to spend one”™s way out of the doldrums. But all that is about to change, according to TD Bank, which says in a new survey that a near-Utopian economic picture is just around the corner for those who are steering toward services and exports, and even to exported services.
TD maintains 1,250 banks on the East Coast, 201 of which are in New York state, including regionally.
“The next few years will mark a new phase for the U.S. economy, characterized by accelerated job growth and increased opportunities for small- and medium-sized enterprises (SMEs), particularly in international trade,” TD economists said in a statement.
Hot services should include advertising, law, accounting and financial services.
The sluggish economic recovery is partly attributed to the fact that SMEs have been hit on two critical fronts, the economists said. “One, they were highly concentrated in the hardest hit industries of the recession. And, two, tight credit conditions have been made worse with collateral tied to real estate. Of the two influences, the mix of industry concentration now seems to be the bigger, lingering issue holding back SMEs.”
Beata Caranci, TD”™s deputy chief economist, said as part of the study, “Fortunately, the recovery is broadening out beyond the manufacturing sector and domestic demand is gaining strength. Opportunities for new firms to start up and take advantage of the economic recovery should continue to rise.
“In the second and third quarters of 2010, SMEs ”“ businesses that employ fewer than 500 people ”“ began to reinstate their status as a dominant hiring source, accounting for 60 percent or more of national net jobs gains,” Caranci said. “Although SME data at this disaggregated level is only available to the third quarter for 2010, there is reason to believe that small-sized firms were instrumental in driving the strong job gains seen over the February to April period in 2011. These firms have a high representation in the service sector where jobs accelerated sharply within the national nonfarm monthly payroll figures.”
The TD study also predicted “enormous potential” for SMEs to tap into foreign markets.
“Emerging-market economies already make up 50 percent of the world economy and in the next decade that share will rise to 60 percent,” Caranci said. “Given the increasingly diverse growth in world demand and the global competitiveness of the current American dollar, businesses adept enough to navigate products and services in an export market face a number of unique advantages over those focusing solely on the domestic market.”
This opportunity, the TD economists say, will allow SMEs in the service trade industry ”“ a key driver of exports ”“ to expand sales and provide services such as accounting, advertising, consulting and legal advice.
Those who take the plunge across borders, Caranci said, become more experienced in navigating foreign markets, including recruiting the appropriate talent and services.
“Looking beyond the U.S. business cycle, the increasing global nature of economic growth should not be overlooked as businesses recover from the recession,” Caranci said. “Some are already gaining a foothold in high-growth countries in emerging markets such as Asia and the potential to expand further is prodigious.”
