The stock market is taking another major hit today after consumer confidence numbers came in well below expectations. The Conference Board, which measures the monthly consumer confidence number, reports that June’s number fell to 50.4%, down from 57% in May. Big investors had been anticipating consumer confidence numbers in the 56% or 57% range.
But those are just numbers – the real questions what are they telling us? And what does that mean for the technology sector.
The answer to the first question is easy. Americans are absolutely terrified about rising energy prices. With the cost of everything from gasoline to corn to computer parts impacted by skyrocketing oil prices, consumers’ pocketbooks are taking a major hit, and subsequently, so are the bottom lines of U.S. companies.
I keep hearing rumors about an energy bubble that’s about to break, bringing oil prices down from their highs of about $135 a barrel. The thinking is that the U.S. Congress might impose restrictions on oil speculators (which proponents say will cut oil prices in half in 30 days, which I doubt) and that Americans will impose their will on Democrats who stand in the way of drilling for oil domestically. That move I like – sending our money to Saudi Arabia or Russia for oil is insane – it’s devalued our own dollar and made us dependent on overseas governments – not all them stable. Producing our own oil like the Chinese, Russians, and even Canadians do would send a blunt message to oil importers that their days of energy supremacy are numbered, and that to compete with an American producing a good portion of its energy needs, worldwide oil prices would have to come down.
Simultaneously, we could have our best technology minds working on commercially viable forms of alternative energy, including nuclear power, which seems to satisfy the energy needs of progressive countries like France and Germany with no negative safety issues.
Ironically, with all this doom-and-gloom consumer sentiment going on, there are emerging signs that the technology sector is actually in robust health. In a report rolled out this week, the American Electronics Association found 51 of the top 60 U.S. cybercities — those with the most technology workers — added high-tech jobs in 2006, and are at the top of the list in adding new jobs in 2008. The report also found the average technology industry wage was 87 percent higher than the average private sector salary.
According to the Associations web site, members of the American Electronics Association include Apple Inc., Microsoft Corp., Google Inc., Intel Corp. and Yahoo Inc.
While critics point out that most of the study’s data comes from 2006 and 2007 – years that weren’t as tough economically as 2008, the association’s leadership begs to differ.
Says Christopher Hansen, president and chief executive of the trade group, "The tech sector is not laying people off. If anything, the industry is having trouble getting enough people with the right credentials."
The study shows that the same consumers who are expressing doubts about the economy are – if they work in the tech industry – in bigger demand than ever. That’s especially true in our nation’s biggest cities.
Consider these findings from the report . . .
- Seattle led the nation in technology job growth in 2006, adding 7,800 positions.
- The New York metropolitan area had the most high-tech employees in 2006 with 316,500; followed by San Jose, Calif., in the heart of Silicon Valley, with 225,300 tech workers; and Boston with 191,700.
- Silicon Valley had the nation's highest concentration of high-tech workers with 286 industry employees for every 1,000 private sector workers.
- The Washington, D.C., region led the nation in technology job growth between 2001 and 2006, adding 7,500 workers.
No, it’s not a perfect jobs climate in the technology market. But it is a solid one. It may take some time, but consumers will pick up the pieces and spend again. That will happen sooner if the U.S. develops a smarter energy plan, and if industries like high technology keep hiring at their present pace.