2013: The Good and the Bad

The Good News
The Department of Labor reported in November that leisure and hospitality employment continued to trend up, adding 23,000 jobs for the month. Throughout the past 12 months, the industry has added 305,000 jobs. This indicates that hospitality companies, including casinos, are mildly optimistic for the year ahead. If this trend continues, suppliers could anticipate an increase in gaming equipment investment from operators during the year ahead, barring any unforeseen disasters.

The cost of getting from point A to point B will continue to fluctuate based on where you buy gas, but 2013 will bring with it lower prices, due to the restart of many refineries nationwide, particularly the Gulf Coast. This increase in production will keep transportation costs down. Home heating oil and diesel, like gasoline, will also fluctuate in price, but will trend downward due to the same increase in supply. All these variables could very well impact domestic casino visitation numbers, as customers will likely have more a few more dollars in their pockets for things like entertainment. The reduction in gasoline and fuel oil prices will have an anti-inflationary effect that will ripple through the entire economy, and prices for items sometimes not factored into casino visitation, such as for groceries and air travel, will be favorable to the casinos’ bottom line.

Organized labor has been dealt a devastating blow with “right-to-work” legislation being passed in both Michigan and Indiana, bringing the number of right-to-work states in the U.S. to 24, with Connecticut likely to follow suit soon too. Workers now have a choice as to whether they want to support a union or not with their own hard-earned money. For decades, big out-of-control organized labor has destroyed one U.S. industry after another, including textiles, steel, consumer electronics and automotive, just to name a few. Right-to-work won’t do away with unions, which wouldn’t be good at all, but it will force unions to be more representative of their membership. This is likely to rationalize labor relationships and foster growth. If this trend continues and spreads, commercial gaming gets a direct bump and all of gaming enjoys the benefit of a healthier economy.

The Bad News
The U.S. economy is expected to grow at a lackluster 1.6 percent in Q4 of 2012. That’s been revised down from 1.8 percent, according to the median forecast of more than 60 economists polled by Reuters in November. The same group is predicting a growth rate of 1.5 to 2.5 percent in 2013, much shy of the growth rate of 3.5 to 5.5 percent required for a healthy economy. The state of the economy takes a toll on the attitudes of job creators, investors and consumers at the worst possible time. It crushes any possibility for consumer optimism and lends itself to very conservative decisions on spending, which exacerbates the underlying economic malady we are in. Having consumers fearful and afraid to spend is not at all helpful to a gaming industry just barely keeping its head above water.

The New Year ushers in with it Obamacare. The health care system in the United States needs reform, but not the sort of changes enacted under the new health care law. Obamacare grants the federal government control over health care benefits and financing, and establishes a complex one-size-fits-all health system, and centralizes America’s health care decisions in Washington. There is very little the federal government gets their hands on that runs efficiently. With 52 billion dollars in new taxes to be levied onto businesses annually during our harsh economic slowdown, all while living with a federal debt over $20 trillion and an estimated trillion dollar-plus deficit predicted each year for as far as the eye can see, well, it’s madness. It reminds me of that old saying, “You think health care is expensive now, just wait ‘til it’s free!”

I’ll close my predictions for 2013 with a definition inspired by a T-shirt given to me as a gift by a close friend. Unfortunately, the message is all too true: Ineptocracy (in-ep-toc’-ra-cy)—a system of government where the least capable to lead are elected by the least capable of producing, and where the members of society least likely to sustain themselves or succeed, are rewarded with goods and services paid for by the confiscated wealth of a diminishing number of producers.

Peter Mead,
Casino Enterprise Management

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