Five things that will shape Alabama businesses in 2013

housing pic AP file.JPG

Continued recovery in the housing market should boost businesses tied to the industry in 2013. (AP file photo)


Businesses across Alabama are closing their books for 2012 and looking ahead to the new year with a mix of concern and optimism.

We asked Keivan Deravi, an economist at Auburn University Montgomery, and John Norris, managing director at Birmingham’s Oakworth Capital Bank, to talk about the key factors that will shape the direction of commerce in the state during 2013.

1) Fiscal cliff/debt ceiling negotiations: Congress is attempting to reach a deal in the waning hours of the year to avoid going over the fiscal cliff, the scenario of higher taxes and reduced spending set to go into effect at midnight.

While going over the cliff will certainly affect every state, including Alabama, Deravi said he is more concerned about upcoming negotiations on the U.S. debt ceiling. The fact that there is no long-term solution to that problem continues to breed uncertainty, which is ultimately poisonous to business planning and growth.

“This is just foreplay for the real negotiations that will go on in February,” he said.

2) Affordable Care Act: Speaking of uncertainty, there’s also sweeping healthcare reform that has prompted questions from all kinds of businesses.

Small business owners in Alabama are waiting for answers from Washington, Norris said, and in the meantime, they don’t know what their costs will be. Some businesses are making preemptive moves by limiting employee hours.

The new legislation also is affecting healthcare jobs, he added.

In 2012, Norris said, “We did not see the type of growth you might expect in healthcare in the Birmingham-Hoover metropolitan area. I think a lot of that is due to the healthcare act.”

3) Growth in big industry: Last summer, Airbus announced plans to build an airplane factory in Mobile, a project that is expected to create ripples across the region in the form of new supplier and support businesses.

Alabama’s auto industry also will continue spinning off new jobs and investment. For example, early 2013 should bring more announcements about supplier projects for the Mercedes-Benz C-Class sedan that will join the automaker’s Tuscaloosa County assembly lines in 2014.

The Honda plant in Talladega County and the Hyundai plant in Montgomery also continue to grow.

4) The global economy: The value of Alabama goods and services shipped around the world last year reached a record $18 billion, and exports will continue to play a key role in the state’s economy.

That means any potential shifts in global demand for Alabama steel, coal or other products will be felt here at home.
“The global economy is not just something that happens out in the void,” Norris said. “The global economy is something that happens here in Alabama.”
5) Recovery in housing: Home builders, real estate agents, mortgage lenders and others tied to the housing industry should feel the effects of continued improvement in housing, Deravi said.

Although tax code changes regarding home mortgages could have a negative impact, other indications point to a “digging out” of the industry slump.

“We should see accelerated buying and refinancing, and banks should begin making more loans,” he said.

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