Strome Business Minute With Dr. Jeff Tanner

The title of the band's fifth album, “Dance Fever,” refers to a 14th century ritual where groups of people burst into dance frenzies to the point of exhaustion or even death.

I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. The COVID caused recession has affected the Port of Virginia but really only in a mild way. While the number of ships calling on the Port has declined every year for the last 4 years. That’s really because the ships are getting bigger and carrying more cargo, necessitating fewer ships. Import volume and value, though, have declined 12 and 15 percent due to the recession. Export value, on the other hand, has held steady though volume has declined about 5.5 percent. Coal exported from Virginia is down over 13 percent. One piece of good news in all of this, though, is that employment recovered in maritime supply chain and logistics from a dip in May and is now back to nearly 250,000 jobs. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. We already discussed here the shrunken inventory of homes for sale in the 757, down to its lowest level in 15 years. New home construction can’t keep up with the demand due to labor shortages so the median price of homes has crept up as supply can’t keep up with demand. Strome real estate professor Walter D’Lima’s research shows that our market is representative of the national residential market. Overall, new listings for existing homes are down across the country, as demand is shifting from apartments to houses. But his study also shows that starter home owners are also trading up. But mid-priced owners aren’t trading up. Inventory of higher priced homes is way down and those prices have actually declined so now may be the time to move up. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. With interest rates so low, the mortgage refinance business has been going strong, up some eighty four percent. Fannie Mae and Freddie Mac, the two largest purchasers of mortgages, though, just slapped an additional half a percent fee on cash-out refinances, claiming the COVID-induced recession adds risk. The two government-sponsored organizations are forecasting an increase in losses on qualified loans due to recession-based defaults. Trade groups denounced the fee, which begins September 1, noting that borrowers who haven’t locked in their refinancing will have to pay the fee, expected to average fourteen hundred dollars. Still, a Zillow spokesperson told Barron’s that the refinance market is likely to remain hot and Forbes expects rates to fall even more. Lenders could choose to absorb the fee, so shop around and pay attention to the closing costs. This Strome Business Minute is presented by the Strome College of

I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. In June, Facebook committed one hundred million dollars to advance US-based Black businesses, artists, and nonprofits. Last week, they unveiled their plan to offer Black businesses up to forty million dollars or forty percent of the original commitment, as grants. The grants, for Black-owned businesses with fewer than fifty employees, are broken into twenty five hundred dollars in cash and fifteen hundred dollars in Facebook advertising credits and the program will be administered by Accenture. Facebook’s goal is to pump the cash out in a hurry, hoping to get all of the cash released by the end of August. The grant application process opens today and they plan to support ten thousand businesses before the program concludes. With Black-owned businesses closing at twice the rate of other small businesses, every bit helps. This has been a Strome Business Minute, presented by the Strome College of Business at Old Domini

I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. The Brookings Institute is publishing a weekly economic recovery matrix that reports a metro area’s performance across a dozen measures. For each measure, Brookings reports the actual value for that metro, color-coded by how it compares to other metros of a similar size. The measures include things like business closings, unemployment, commercial real estate vacancies, multifamily rent, and air travel. Our metro area is compared to 52 others with greater than one million in population. Compared to most in our class, we’re doing pretty well, much better than Richmond for example. We’re actually among the 5 strongest for variables like business travel, multifamily rent, and small business closings, and in the next tier for jobs change and job postings. Yes, things are down but much less than in other cities. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. When the COVID caused recession began, one segment that seemed unaffected was construction. Of course, commercial construction projects can take years and typically, though not always, continue on in spite of the economic downturn. The Association of Building Contractors, though, says that construction shrank thirty five percent last quarter, a little bit more than the overall economy. Supply chain disruption made it harder to get materials, some laborers left to take unemployment with the bonus, and other factors contributed to the decline. Hardest hit were retail and hospitality, and with the closing of so many businesses in those sectors, new space may not be needed, leading to postponements and cancellations. But data centers, fulfillment centers like the two Amazon is building here, healthcare and manufacturing may begin to pick up the slack. This has been a Strome Business Minute, presented by the Strome Colle

I’m Jeff Tanner and this is a Strome Business Minute. I’m often asked how the stock market remains at record highs while the economy struggles. As we’ve discussed here, the stock market and economy are not the same thing – for one, when you buy stocks, you’re buying future earnings one to two years out. The market is betting on beating the pandemic, whether by a vaccine, herd immunity, or better treatment. For another reason, what you see as the market is really only a few stocks. The Dow Jones average, for example, is the average price of only thirty stocks and six of those propping up the entire market. Companies with a strong online presence are actually benefiting from the pandemic. But so are large companies are benefiting from the closure of smaller competitors who haven’t been able to weather the pandemic. Put it together, and the market stays strong. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. According to Virginia Business Magazine, Virginia is home to 281 companies listed in the Inc 5000, comprised of the fastest growing companies in America. Other than growth, criteria for the list include that they must be private independent companies, not divisions or subsidiaries, and that they had to be at least one hundred thousand in revenue five years ago. Number one in Virginia is Sassy Jones, an online retailer of jewelry and accessories based in Richmond. We had one in the 757, Kern Technology Group in Virginia Beach, a government services provider primarily serving maritime and defense customers in developing new products and solutions. The company grew over 1,000 percent, placing them at number 407 on the list. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. ODU cancelled its football season last week, hoping to play a shortened spring season. The financial impact on the school will be tough but imagine the financial impact of the Pac 12 and the Big 10 dropping fall sports. Just in television advertising alone, companies spent an estimated one point seven billion last season. A T & T led the way spending seventy million dollars, followed by Allstate, Chic-Fil-A, and State Farm, each spending about thirty million. According to Kantar, a firm which tracks advertising spend, the national championship game alone brought in over ninety million. Fox and Disney will take the greatest hits, as they own ESPN and ABC, the two largest college football broadcasters but it puts more pressure on other Power Five conferences to play for the money. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, and this is a Strome Business Minute. Student loans have been put on hold for another 90 days by executive order. The CARES Act had originally included a provision suspending payments for 6 months, or through the end of September. Trump’s order suspends payments until the beginning of 2021. Interest will not accrue during the period. The COVID crisis isn’t the first time student debt has been suspended. Other times included natural disasters such as Hurricanes Harvey, Irma and Maria and the California wildfires. But did it help? In the three quarters following the suspension period, defaults and delinquencies increased significantly. Clearly, the economic conditions caused by those disasters were harder for some borrowers to overcome. For others, the pause simply delayed the inevitable. What we don’t know is how many avoided delinquency because of federal suspension. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. This fall will be strange without high school football and baseball’s empty stands at the World Series. But at least we’ll have Pumpkin Spice. In fact, Dunkin is bringing it back one week early, today, with Pumpkin Spice coffee, donuts, and muffins. You can put COVID down as the cause but Dunkin has moved the introduction for the flavor one week earlier each year. Starbucks will maintain their late August start date, August twenty seven, for its pumpkin Spice Latte. While I don’t have sales numbers for Dunkin or Starbucks pumpkin products, overall the category has grown over fifteen percent in revenue and over seven percent in volume over the past few years, making this one of the most anticipated announcements each fall. Even Rover can get pumpkin flavored dog food. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. Sentara’s blockbuster merger with Cone Health in North Carolina will result in a healthcare system with eleven billion in assets. While Cone brings five hospitals compared to Sentara’s twelve, Cone officials are adamant that this is a merger, not an acquisition, and state the new company will maintain a regional headquarters in Greenville. But the merger can only result in efficiencies and lower overhead by consolidating back office functions. Both hospitals struggled in the first quarter, pre COVID, with Sentara actually posting a loss, performance which heightens the need for cost reductions. Cone has recovered but Sentara said last May that even if services reached normal levels, revenue would still be down millions this year, performance that will put the pressure on to lower operating costs particularly in the home office. This has been a Strome Business Minute, presented by the Strome College of Business at Ol

I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. Last week, we discussed the Justice Department’s probe into Facebook, Apple, Amazon and Google. The companies also just posted earnings for the last quarter, adding more fuel to the fire because most of their growth came from advertising revenue, the area of concern for the probe. Google’s sales actually declined for the first time in the company’s history, but less than expected at one point five percent. Facebook had a record quarter in user growth and revenue growth, with almost all of the revenue growth from advertising. Apple, however, also saw growth in its music streaming and iCloud services. Amazon was the biggest winner with a forty percent increase in revenue and a more than five billion dollar increase in profit. Overall tech stocks jumped on the blowout earnings, except Google which dropped slightly. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion Unive

I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. The internet giants Facebook, Amazon, Apple, and Google are being investigated by the Justice Department for violation of antitrust laws. The company facing the strongest pressure is Google, and expectations are that the Justice Department will file suit against Google by the end of the year. The reason for the probe is potentially illegal tying contracts, which require a buyer to buy unwanted products in order to get the products really wanted. Google’s problem is that they bundle services into packages and you have no choice but to buy the full package. Companies that want the Google search engine and advertising services also have to buy YouTube and other services. This won’t change the creepy tracking we get on the internet, but unbundling would reduce costs to advertisers and perhaps consumers. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. ADP recently released payroll numbers, stating that 167,000 jobs were added to the private sector payrolls this past month, well below the 1.9 million that were expected based on a survey of economists by Econoday and a forecast of one million from Dow Jones. The wide variance in forecasts and the actual outcome point out the challenges in making any predictions in this turbulent economic time. Almost all of the new jobs were from service providers and mid-size companies actually lost twenty five thousand jobs. The government unemployment numbers will be released Friday, but ADP’s estimates have generally tracked government numbers fairly well, even though they are developed using different methods. The lack of job growth will certainly add urgency to stimulus talks. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. Tax policies of the political parties are fairly stable over time, with the Republicans favoring wealth creation over wages and the Democrats favoring wages over wealth. You see this in changes to capital gains taxes, estate taxes, and income taxes, but you also see it in property taxes and usage taxes, like gasoline. So who would the stock market prefer? Surprisingly, over the last twenty seven presidents and thirty eight terms of office, the market performed better under a new president than a second term president, regardless of party. Further, markets under Democrats tend to do better, and the markets like it best when the parties switch, especially from Republican to Democrat. But the Raymond James analysts who did this analysis say there really isn’t enough data to know with any certainty. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. Last Sunday at Fresh Market I noticed these signs all over touting their rating as one of the cleanest stores in America. Today, I got an email from American Airlines outlining their policies for safer flying. These two marketing strategies really have the same goal, to build consumer confidence that they can safely buy from both. Having a clean store or touchless ticketing is great but one problem is other people – those shoppers who defy mask orders. Cathy Lewis, host of W H R V’s Hearsay, set up the facebook page Mask- Friendly businesses in the 7 5 7 so you can find places to shop where people wear masks. Restoring consumer confidence in the safety of doing business is foundational to getting out of this economic crisis but it takes all of us. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. A lot of focus has been on the potential for a COVID vaccine. In fact, one economist likened the rush for a vaccine to the development of the atomic bomb, a race run by countries who want to be first. But a vaccine is only part of the story. Another part, and possibly more important if COVID acts like the flu and mutates every year, is effective treatment. And one of our local companies is on the forefront. Realta, the Norfolk based pharmaceutical development company, received FDA approval for first round studies of a treatment for the effects of the Corona virus. This treatment won’t eliminate COVID, but it does show the possibility of reducing the inflammation of the lungs that so often kills the patient, which, if it can do that, will save lives and that’s great news. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. If it feels like you’re spending more on groceries during COVID, it’s because you are. I compared grocery costs December to May using government monthly reports of prices for the same items. My analysis shows an annual average increase of eight percent. I compared thrifty baskets and luxury baskets for a family of four with pre-teen children. The luxury basket is rising faster, at almost twice the rate. But we’re also spending more when we have groceries delivered and spoiled produce is included, and it also feels worse because we’re eating out less or paying more for delivery. These findings, though, support those of IPSIS which did a global survey and found that consumers report spending more. But deflationary pressures in other areas of spending have helped soften the blow. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.