The economy is weak. Unemployment numbers are staggering. Business is bad. Pessimism has replaced optimism. And this is all two years after the Great Recession supposedly ended. Like every other industry, the economy is taking its toll on the broker business.
To CAP OR NOT TO CAP
Tightening budgets is such an issue that lawmakers are in heavy debate about whether or not to cap the nation’s spending level. U.S. Sens. Bob Corker, R-Tenn., and Claire McCaskill, D-Mo., have introduced the Commitment to American Prosperity Act, which would phase in hard caps on government spending over a 10-year period and impose sequestration, or an automatic spending cut, if the caps were breached. But not everyone is keen on the cap.
BYE, BYE, OPTIMISM
After the economic report was released July 8, stocks plunged. The Dow Jones industrial average fell 132 points in the first hour of trading. Broader indexes also declined. The numbers speak for themselves: Businesses added just 57,000 jobs in June—the fewest in more than a year.
JOB GROWTH? WHAT JOB GROWTH?
According to research from McKinsey & Co., it will take the United States until 2016 to replace the 7 million jobs that were lost during the 2008-09 recession. And to gain full employment—finding work for the unemployed and accommodating the 15 million Americans expected to enter the labor force this decade—the U.S. economy must create 21 million jobs by 2020.
“Business succession planning or agency sales will likely also be affected by this murky environment,” says Brian Robertson, executive vice president of Fringe Benefit Group. “How will agents get the most for their business when they are ready to sell? Or how do they bring their next generation into an ever changing benefits world?” And with less people employed, that means less business for brokers.
But there’s always some good news to fall back on. “When the economy expands so do the number of employers adding benefits,” Katz says. “Since the worst of recession is most likely behind us, producers should see their business recover, too.”