CPI, PPI, SBA, 9-0, and Edward Gardner
This Week’s Mixer Prep – This information should get you through any business mixer this week…
Wholesale inventories increased slightly by 0.1% – bad good-news.
The Consumer Price Index was lower than expected – good good-news – 5% year over year.
Prices aren’t go up as much; the trend is good. Last month it was 6%.
Perhaps this is enough to make the Fed think about not raising rates.
The Producer Price Index was down significantly – excellent good-news – 2.7%, down from 4.9%.
The PPI report captures what companies pay for supplies such as fuel, metals, packaging and so forth.
PPI prices dropped – yes, dropped – on a month to month basis. Not increased less, but actually decreased.
U.S. Retail Sales dropped more than expected – good bad-news.
If you are a store owner, your sales were down 1% in one month. Yeah, that’s bad news no matter how you look at it.
Overall, a good mixture of bad and good good-news. Regardless, the odds of a rate increase in May are still at least 50/50, perhaps higher.
If rates are raised, it will likely be the last time for a while.
Under the Category of “Careful What you Ask For”…
In early 2022, a Society of Human Resource Management – SHRM – employee was making a very good case for being able to work offsite, as her technology position could really be done anywhere, as she wanted to move to Virginia.
Impressively, her boss agreed, but then took it one step further.
He reasoned that if it can be done anywhere in the US, it could be done anywhere in the world.
Her position was outsourced to India.
SHRM saves 40% on their labor costs by doing so.
Is it me or is it really odd that the Society for Human Resources outsources its Human Resources? Just seems weird.
But money talks.
Many other companies are responding to rising wages and labor shortages by sending jobs overseas.
7.3% of senior managers surveyed by the Atlanta Fed said they were moving more jobs abroad as a result of remote work.
Deel, an HR company that helps hire abroad, said hiring through its platform doubled last year.
The differences now are that these jobs are higher-end, white-collar positions.
In my Report on October 3, 2022, I talked about a small, local factoring company that had moved five positions out of country. Two to Columbia and three to India because he could not keep up with rising wages and lack of available employees.
Per the business owner, both were successful, completing their tasks well. However, due to a 40% drop in revenue, the Columbia operation was impacted and closed down.
The owner does see business coming back.
Regardless, the move was a win-win for his company.
Something to think about to stay competitive.
Nine to Nothing
No, that’s not the score of any of the Tampa Bay games.
That’s the decision of the Supreme Court of the United States – SCOTUS - in a recent case.
Sounds like they can all be on the same page. Or not. But that’s the point of having nine justices; everyone has an opinion, except this time, they all had similar opinions.
CAVEAT: I can’t even dream of summarizing 41 pages of a decision, but if you want to, the link is here.
In essence, the issue in front of the court was how far does an individual or business have to go in its due process with a federal agency before they can challenge the decision by that agency in federal court, if at all.
And that last point is key, because some of the agencies stated that their decision was final.
Also, the Federal District Court said it’s really not in our jurisdiction; sorry.
It’s like your mom putting you on restriction, you go to your dad and he’s too busy watching the football game and he tells you to listen to your mom and not bother him anymore.
Let’s say you or your business had an issue with a federal agency, in this particular case, the Federal Trade Commission (FTC). You think that the actions of that agency (and many others) were unconstitutional, but what could you do? Really not much.
The agencies also stated that before you can take them to federal court, you had to go through all of the steps in their internal appeal and decision processes.
Some agencies claimed it was unconstitutional to do otherwise. In other words, don’t even think about it; you won’t like it if we get even more irritated than we already are.
Speaking for the Court, Justice Elena Kagan stated that the agencies are not suited to judge constitutional claims. She said the FTC “knows a good deal about competition policy, but nothing special about the separation of powers.” Ouch.
Basically, the US Supreme Court told administrative agencies that they have been over-reaching their authority – big shocker - and put them in their place.
They can’t write, enforce and adjudicate their own policies as an agency.
That’s just a little far-reaching. Oh, and unconstitutional.
They also allowed an avenue to challenge the agencies by allowing the Federal District Court to intervene. In other words, even if dad was busy watching football, he would have to pause the game and officially intervene, even if he came up with the same opinion.
SCOTUS was simply enforcing the separation of powers.
Unanimously.
Who Was Edward G. Gardner?
Like many men born in 1925, Mr. Gardner served in WWII, after which he earned a bachelor's degree from Chicago Teachers College followed by a Masters in Education from the University of Chicago.
While he was teaching and working as an assistant principal, he moonlighted as a hair-care products salesman. He became quite the expert and determined that the Black population was very underserved when it came to haircare products.
He thought he could do better than the products available, so he founded Soft Sheen.
Mr. Gardner mixed those products in his basement, his wife did the books and their children helped with packaging and other chores.
In the late 1960’s, he got an SBA loan for $50,000 to quadruple his manufacturing plant, enabling him to go nationwide.
Yep, an SBA loan, just like the Small Business Administration had been doing for decades. You should try it sometime.
Sales in 1979 were $500,000. Then something happened.
The album Thriller came out in 1982 showing Michael Jackson sporting Jheri curls. Soft Sheen had a product for that.
Sales in 1984 were $75,000,000.
Soft Sheen was sold to L’Oreal in 1998.
Mr. Gardner passed away last month at the age of 98.
Per the Wall Street Journal, he resisted the idea of making Soft Sheen a publicly traded stock. “Once you have to answer to shareholders, you lose the power to do good.”
His main goal was to provide jobs for his community. And he did, with the focus on young people and education.
His wife and children survive him to carry on his legacy.
Mr. Gardner’s story is a mirror of thousands of entrepreneurial stories. Someone sees a need, creates the product (usually out of a basement or garage), sells it, expands, makes more, sells more and then gives back to the community that raised them up. All without taking advantage of someone else.
The really exceptional part of this story is going from $500,000 in revenue to $75 MILLION in 5 years. 99% of entrepreneurs can’t do that, but Mr. Gardner did.
The crazy growth aside, this is a vast majority of business owners. Many fail but many succeed. And I promise you the first generation NEVER forgets where they came from.
Final Thought
When you plan out your capital needs, don’t forget to include the SBA – The Small Business Administration – in your financing needs. They can help.
