Strategic Exchange: History suggests there will be a resolution to the debt ceiling crisis. – June 2023

By Kemp Harr

Care to place a wager on whether the debt ceiling issue will be resolved before the government runs out of money? If your savings are invested in the stock market, you’re in the game whether you like it or not.

Congress has increased the debt ceiling 78 times since 1960, so the odds are in our favor that this gets resolved prior to the deadline. It’s comforting to know that the U.S. has not defaulted on its debt since the War of 1812, and it’s not likely to happen now. But playing chicken with the debt ceiling has negatively impacted the stock market in the past. In the summer of 2011, when Republicans acquiesced two days before the deadline, the U.S. credit rating was downgraded, and the S&P 500 fluctuated 19% from its peak to its trough. Millions of dollars changed hands as nervous investors and the mainstream media played the “what if” game and sensationalized the negotiations between our two-party system of government.

STARNET’S SPRING MEETING
As you will learn in this issue, 2022 was a strong year for the commercial flooring sector. As such, it was no surprise that the tone of Starnet’s mid-May meeting in Scottsdale, Arizona was festive and upbeat. Close to 650 members and vendors attended this meeting, and the members celebrated a record year for rebate checks due to the growth of their purchases from the vendor partners. In addition to the party atmosphere at the posh Fairmont Princess hotel, there were some interesting keynote presentations, the annual Starnet Design Awards dinner and a shift in leadership within the Starnet board of directors.

ITR Economics president Alan Beaulieu’s message to the group was, “While the economy will be slowing down around you, your business will be fine for the next 18 months.” ITR is forecasting a mild recession beginning in the fourth quarter of 2023 that will result in a reversal by the Fed to start reducing interest rates in 2024. And since the non-residential (commercial) sector is a lagging sector from a timing perspective, it will be the end of 2024 before the Starnet members’ businesses are impacted. The total construction market will continue to rise through mid-2024, and the vertical commercial sectors that will bring the most opportunity are healthcare, education and multifamily residential. The corporate market will continue to be soft until mid-2025, and Beaulieu added that we will continue to see a labor shortage as more Baby Boomers retire from the workforce. His final prediction was that Europe will replace China as the U.S.’s primary trading partner.

The second keynote at Starnet’s meeting was Kay Sargent, the director of workplace design with HOK. Her core message was that CEOs see the value of having employees interact in an office environment, and that we should see a trend toward fewer flex days-moving from 3:2 to a 4:1 model (ratio of office time to work-from-home). She added that designers like HOK can certainly create a space that is a fun place to work, but that it is company culture that drives participation and engagement. She noted that workers like to be part of a team, and it’s difficult to build a team atmosphere among remote workers, adding, “People want to belong.”

One of Sargent’s key points was centered around neurodiversity-the concept that people think, process, learn and behave in different ways. The goal is to create a workplace environment that allows employees to work and achieve in their own way. There is no cookie-cutter solution that works for everybody.

On the last day of the meeting, Starnet’s membership met behind closed doors to thank Chuck Bode for his five years of service as their chairman and to elect three new board members. New to the board are Dave Triepke with Universal Metro, Skip Mancini with B.T. Mancini and Ellen Zucker with Diverzify. The group also chose Steve Cloud with M. Frank Higgins as its new chairman.

SCHÖNOX PORSCHE TRACK EXPERIENCE
In early May, Thomas Trissl, CEO of HPS Schönox and Küberit, invited 30 commercial dealers to experience his favorite hobby, Porsche race car driving, and also learn a little more about what sets his brands apart from his competitors. I’m not sure where Trissl, the immigrant son of a German flooring contractor, learned how to build brands, but he is on top of his game. Many marketers have been taught that the trick to branding is to make sure your brand is, one, well known in the minds of your customer and, two, known for a positive experience. This three-day event excelled in both of these areas.

Not only did the guests learn more about what makes Schönox’s floor prep products and Kuberit’s profiles/transitions the best in German engineering on the first day of the event, but they also got to drive Porsche race cars around Barber Motorsports Park’s 2.3-mile track for two days. You could tell by the smiles that it was a positive experience.

CARPET AMERICA RECOVERY EFFORT ANNUAL MEETING
At the end of April, CARE hosted its annual meeting in Orlando, which attracted 90 people focused on reducing the amount of post-consumer carpet that ends up in the nation’s landfills. Listen to my interview with Bob Peoples, the executive director of CARE, for a recap of the meeting.

If you have any comments about this month’s column, you can email me at kemp@floorfocus.com.

Copyright 2023 Floor Focus 

Related Topics:Beaulieu International Group, Starnet