There’s a serious disconnect between Wall Street and Main Street these days, says Peter F. Ricchiuti, business professor at Tulane University in New Orleans, and he warns against misinterpreting the stock market as a measure of the current economy.
Low interest rates and government bailouts have been catalysts for the incongruity. “Large corporations see a lot of room for improvement, and they like that,” Ricchiuti says. “Unfortunately, that’s not necessarily good for Main Street, and small companies can’t get access to the same capital or rates.” That’s resulted in thousands of bankruptcies, a situation aggravated by increases in COVID-19 cases, the lack of a new stimulus package and large-scale unemployment.
Ricchiuti gave the keynote speech during the virtual Louisiana International Trade Day on Nov. 4, hosted by the World Trade Center of New Orleans. The annual event focused on the historic and unprecedented challenges faced by regional businesses and trade professionals in 2020, and the evolution of creative new approaches to tackling those challenges. WTCNO is comprised of Louisiana- and Gulf Coast-based businesses that span a diverse set of industries and educational institutions.
Ricchiuti says while there will be some “permanent scars” that come out of 2020, they’re not all necessarily negative. “We’re going to have simpler supply chains,” he adds, “where a lot of materials come from sources closer to home, either domestically, Mexico or Canada.” He also expects lower “headcounts” in the typical work space, with remote working becoming the norm—not the exception. “It’s not a fad,” he adds. “A lot of us are never going back into the office.”
Also speaking at the event, Edward Hayes, a partner at Leake & Andersson LLP in New Orleans and adjunct professor at Tulane, says a “trifecta of market pain” including low oil prices, trade tensions and COVID-19 has led to steep declines in trade since 2018. “Some of that has to do with trade with China, but it covers a variety of commodities,” Hayes says. “Petroleum is down 29 percent, corn 32 percent, methanol 23 percent, alcohol 30 percent and soybeans 14 percent.
“And if you look at our trading relationship with Mexico, we’re down 9.4 percent, and we’re down 18.4 percent with Canada, so we’ve got a lot of room to maneuver to get back to where we were,” he adds. Locally, Louisiana has suffered a significant decrease in jobs, projects and capital investments, particularly in petroleum and refining.
Nonetheless, Hayes says current market conditions have forced many companies to develop more agile business models. He also points to the untapped potential of the U.S.-Mexico-Canada Agreement as hope for the future.
Afternoon keynote speaker Michael Hecht, president and CEO of Greater New Orleans Inc., remains optimistic, and expects the impact of international trade to continue to increase. “In Louisiana, with a workforce of about 2 million, more than 500,000 are employed in a job that is linked to international trade,” Hecht says. “That means one of every four workers in Louisiana is dependent on trade for their livelihood. That’s a massive number that is underestimated.” He points to Louisiana’s $34 billion trade surplus in 2019 as another promising statistic.
Also during the event, WTCNO launched its Business Expansion Platform, designed to connect data insights, resources, and business connections to individual member business objectives. The AI-enhanced platform was developed by Expandigo. “We recognize that businesses need a better way to navigate a new normal,” says Ed Webb, WTCNO’s CEO. “Our members have an opportunity to preview a powerful new offering so they can build communities of companies aligned with their business goals.”
Accessed via the World Trade Center New Orleans website, the platform matches a user’s company to prospective customers, suppliers and service providers. Get an overview of how it works here.
