Why profitable growth is critical to the U.S. economy

John Mariotti is the author of the new book, “Roadmap to Profitable Growth.” He will be a guest on The Brenner Brief Radio Show on Feb. 25. Mariotti is the former president of Huffy Bicycles and Rubbermaid Office Products Group.

Growth is such a wonderful way to succeed — if it is profitable growth.  Scarcity is a tough, demoralizing condition. Abundance is much more desirable situation.  The questions are: What to do to get profitable growth? And how to go about doing it?

I have long been a subscriber to the Kiplinger Letter, and found it to be a reliable predictor of the direction of the American.  A recent edition resonated with me more than usual, since it echoed the reasoning behind some of my current convictions about the US economy, its problems and challenges.

I believe that the greatest problem faced by the US economy is its lack of growth and vitality.  Everything else flows from that deep fundamental problem. 

There is widespread unemployment.  Governmental leaders fight every increasing battles over the shortage of resources/tax revenue) or the current administration’s profligate spending to support a rapidly growing dependent population.

Consider these excerpts from Kiplinger’s late Jan. 2013 edition:

It’s not that this economy is so bad. After all, GDP is climbing, unemployment is falling, jobs are being created, and there’s little inflation. It’s just so not good. Growth is listless. For every job that’s open there are three job seekers. Nearly 8 million part-timers can’t find full-time work. Wages are stagnant. Export growth is lackluster, and average home prices…still 15 percent below the peak.

Roadmap front cover imageIn a 2012 survey, this malaise — lack of growth — was named by a vast majority of 700 CEOs as their number one problem/challenge, which reinforced my beliefs in writing Roadmap To Profitable Growth. When I saw the results of another survey, this time popular poll conducted in Nov. 2012, I knew that more and more Americans were realizing what the real problem in America was. 

That survey of 1,000 adults asked, “Is it very important that the president and Congress work on the following issues?”  Those responding “yes” were sorted by age: 18-49 and 50-plus.  Both groups resoundingly said that “Help more Americans find jobs” was the number one issue with 85-87 percent “yes” replies.  The next highest response was on “Reduce the budget deficit” with 73-80 percent saying “yes.”  What is the solution that supports both of these remedies?  Profitable, private sector growth in the US economy!

Kiplinger comments, “When will the economy feel good again…? Not this year and probably not next, either. … [2015 or later]. Though it will get better in the meantime, improving later in 2013 and then throughout 2014. Take GDP growth…a sluggish 2 percent this year. It won’t top 3% annually for two more years. …businesses aren’t likely to get more enthusiastic about hiring. For a rosy jobs picture, it’ll take even longer.

Meanwhile, businesses won’t step on the gas for at least another year, boosting their spending by a modest 4% this year. Eventually, corporate America will dip more deeply into its $1.7-trillion cash cache, but not until CEOs feel more sure about both Washington and the state of the global economy. Better to sit on the cash while there’s risk of a political shoot-out that could freeze credit markets or budget cuts that could tank GDP. New health care regulations taking effect in 2014 don’t help, either.

The lack of business investment coincides with the lack of hiring, all due to a lack of confidence in the policies coming out of Washington. However, some companies are growing, and that growth is driven by competence and confidence in principles such as those outlined in Roadmap To Profitable Growth. 

Google is a prime example of one such company, as it grows by leveraging its strengths and spreading further and further into a constellation of nearby market areas. Profitable growth is not only possible, but also likely, if the right approaches are used.  When there is profitable growth, additional investments are made more confidently, and government revenue from taxes begins to grow along, as do profits, hiring and wages that translate into disposable income and consumer spending. Only through profitable growth will US job creation grow at a sizable rate, and with it, consumer confidence, incomes and spending will likewise grow.

The minimum needed to inspire confidence in consumers: A jobless rate under 7 percent and headed down. A 6 percent rate… would certainly do the trick. But… The U.S. won’t see 6% unemployment again before 2016. To get there, net job creation must be high enough to absorb not only newcomers to the labor force but also most of the roughly 4 million workers who will rejoin it after being laid off.

If and when a new immigration law is passed, the 11+ million immigrants who are here illegally will reassess their jobs and attempt to move up.  This makes the issue of growth even more important.

John Mariotti is an experienced author and former senior executive, and is a contributor to The Brenner Brief. Twitter: @johnentgrp

John Mariotti is an experienced author and former senior executive, and is a contributor to The Brenner Brief. Twitter: @johnentgrp

Now is the time for everyone in private and public sector positions to influence growth in the US economy, to better understand how to go about driving profitable growth.  Government officials who have little or no private sector experience, including the many whose experience was as lawyers, or political professionals, are ill-equipped to know/understand how to create wealth-producing private sector growth.  Business owners need help, since they may have exhausted the growth sources that allowed them to grow in the past.  Corporations, especially mid-market and large companies, have a different dilemma — growing in the face of global competition and latent excess capacity worldwide.  The keys to doing just that are in this “little book.”

It is this array of scenarios that Roadmap To Profitable Growth was written to address.  In the interest of brevity and wider applicability, the book does not attempt to define industry specific solutions.  Just as roadmaps don’t define where a person wishes to go, the book merely lays out the paths, and describes the whats, the hows, and the “what next” steps.  Following the book will get anyone started.

As time goes on and the book gets greater exposure, I plan to detail more application of the principles.  A good start simply involves getting copies of the book (or Kindle version), reading it, sharing it, and beginning to apply it.  It works. I have proven that over and over. Try it!  You’ll see…and you, your company and your country can start enjoying the benefits of prosperity from profitable growth again.

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