Reflecting a lack of consensus among business analysts generally, executives at some of the nation's top Hispanic-owned firms are split over whether the U.S. economy will regain its footing or remain lackluster this year. Unsurprisingly, these same executives foresee vastly different hiring scenarios at their own companies.
"The economy will have little or no growth this year, maybe 2.5 percent at the top," says Dennis E. Nixon, CEO of International Bancshares Corp. in Laredo, Texas. "Some people think the growth will be closer to zero if there are continuing concerns about the war on terrorism."
"I am bullish on the economy," says Vince Eupierre, CEO of Mancha Development Co. in San Bernardino, California. "The war against terrorism will not prevent the economy from growing in the long run. We will see fast growth by the end of the year."
Both agree that, whether the economy sputters or rebounds this year, the burgeoning Hispanic market will continue to provide an economic buffer for many Hispanic Business 500® companies. "It's always helpful to be in a market that's growing in size and purchasing power when the economy is stagnant," says Andy Unanue, chief operating officer of Goya Foods Inc., based in Secaucus, New Jersey.
Various economic forecasts call for growth in the range of 0 to 3 percent this year. Bullish economists argue that mortgage rates will remain low and continue to spur housing construction, home purchases, and refinancing. Moreover, they say, inflation will remain under control, and victories in the war against terrorism will raise consumer and investor confidence, which will boost retail sales and investment in the stock market. Optimists also predict that gasoline prices will drop by the end of the year.
Bears maintain that the economy will buckle under the weight of record budget deficits due partly to the cost of the war against terrorism and the invasion and occupation of Iraq. According to this view, unemployment will continue at 5.8 percent or higher as companies shed more workers; fears of joblessness will continue to hurt consumer confidence and retail sales; and corporate profit margins will remain tight, limiting earnings and business investment. Furthermore, pessimists contend, the economic benefits of presumed successes against terrorism and a sharp reduction of U.S. military involvement overseas have been overstated.
Most observers, including some Hispanic Business 500 executives, believe that the economy's performance in 2003 will depend largely on consumer spending levels. Shoppers have helped prop up the economy over the last few years. However, if consumer confidence continues to wane, purchases of major items such as homes and autos will fall and the economy will stumble, says Mr. Nixon.
"It has taken a lot of promotional activity, such as zero money down for cars, to get the consumer off the sidelines. But once that pent-up demand is exhausted, we begin to have dips. It's the same with housing," he says.
Burt Automotive Network, an Englewood, Colorado–based firm that owns several car sales and service facilities, is bracing for a possible downturn in vehicle sales, despite continued incentives from manufacturers. "It's going to be tougher to sell cars this year than over the last few years," says CEO Lloyd Chavez Jr., whose firm was number 1 on last year's Hispanic Business 500.
The dealership has pared profit margins on autos to the bone but continues to prosper, thanks largely to sales of SUVs and trucks, says Mr. Chavez. The bigger vehicles have a higher profit margin and account for about 70 percent of sales.
