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The Economy • Human Resources • Business Trends

The Economy:
Looking worse than a few months ago, but not for everybody.
Human Resources:
Looking for able hands? Think job fair.
Business Trends:
Web-based phone services now available for small businesses.

The economy
Puzzled about the economy's direction?
You have plenty of good reasons: While manufacturing output and orders sputter, the service sector is firing on all cylinders. The slump in housing and autos continues, but consumer spending isn't taking a big hit. And Nov.'s gain of 132,000 jobs isn't huge, but it's strong enough to keep wages rising.
With the economy in transition ...
Mixed signals are to be expected. But they make running a business much harder.
Are hopes for a soft landing dashed?
No, but the touchdown will be bumpier than we expected a few months ago. We now see a gain in GDP growth of only 1.5% this quarter, which would put the full-year advance at 3.3%.
Next year, GDP will rise 2% or so, marking the slowest expansion pace since 2002.
The second half will pick up steam as the drag from housing begins to wear off and the weaker dollar generates more exports.
Why the big disconnect between manufacturing and services?
Slowdowns in home building and autos are mainly hitting factories by reducing demand for building materials, auto parts and other items.
Manufacturers also are adjusting output to the slower economy after seeing inventories pile up in the third quarter. The adjustments will probably be felt most in this quarter, followed by a leveling off.
The factory picture isn't all gloomy, though, in the year ahead. Still-strong commercial construction will partly offset the housing drag. Demand for tech goods is rising because of bullish orders for computers, cell phones, and other telecom equipment. Makers of medical supplies, especially those specializing in diagnostic machines, are in clover. And brisk global trade will fuel demand for railcars, cargo vessels, etc.
Services will keep racking up sales, thanks to consumer power plus the good financial health of many firms. That'll spur demand for IT, retail, lodging, health care, accounting, law, and many other services. That's good news indeed, since services make up 85% of the economy.

What will support continued consumer spending next year?
Jobs. They'll be plentiful enough to buoy demand, even though the pace of job growth is slowing. About 1.3 million jobs will be added next year, down from 1.85 million this year. But the unemployment rate, currently at a very low 4.5%, won't go beyond 5% ... still a modest level.
Consumer spending ... up 2.5% vs. 3% in 2006.

Human Resources
Offering dental care can save firms money on health insurance.
More employers are adding dental policies as evidence mounts that improving oral care helps keep other illnesses under control. A study of diabetics showed that patients' overall medical costs were reduced 9% when they received early periodontal treatment.
Among insurers providing incentives for oral hygiene: Cigna and Aetna. Their health management programs for diabetes, heart disease, and pregnancy are covering the full cost of periodontal deep cleanings. Meanwhile, Pitney Bowes has added daily flossing to its wellness program. Workers whose daily routines include flossing, eating fruits and veggies, exercising, and wearing seat belts earn $200 off their insurance premiums.

Beating the bushes to find workers in the tight labor market?
Consider participating in job fairs. They're a cost-effective way to see a large number of prospective employees in a short period of time.
More employers in booming areas are taking job fairs on the road, scouring the country for skilled workers they're unable to find locally. For example, energy firms in Wyoming are having success getting good help among unemployed autoworkers in Michigan. And recruiters from Hawaii will travel to West Coast cities in Jan. in search of high-tech workers.
In some cases, local chambers of commerce organize the trips.

Extra days off are on tap next year. Because Christmas 2007 and New Year's Day 2008 fall on Tuesdays, many employers will also close on the Mondays before the holidays, giving workers some added cheer.

Business Trends
Could your home business use an administrative assistant or two?
More and more people working at home think so, giving rise to a surge in companies that provide such "virtual office" services.
For a flat monthly fee, you can choose from among many options to help give your home business a more professional look and feel. Besides a variety of off-site helpers, you can also arrange for amenities such as fancy offices and conference rooms for impressing clients. Costs range from $60 to $1,000 or more, depending on the services chosen.

Video games will be common in job training in a few years. Based on a military version developed by the Univ. of Southern Calif. and now being used to teach soldiers about Iraqi customs and languages, video games will be adapted for many workplace applications. For example, retailers will use them to train clerks in how to deal with customers. They'll also find uses in training police, health care providers, etc.
Phone service via the Web is now being tailored for small firms by companies offering Voice over Internet Protocol (VoIP) technology. Large providers Vonage and Skype will be in hot competition with upstarts for a share of the small business market. Phone plans for smalls feature lower prices and fewer of the bells and whistles big firms want.