RLJ Companies Riding Out Economic Storm
1/5/2012, 11:06 a.m.
The entrepreneur listed a number of formidable challenges which America is grappling with, including a slump in consumer confidence, a moribund housing market, politicians who are unwilling or unable to make hard choices, others who are intimidated by one thing or another, and companies that are hoarding an estimated $3 trillion in cash because of political and economic uncertainty.
Of greater concern, he said, is the growing disparity between whites and people of color.
"There is a $70,000 increase in wealth disparity between blacks and whites, the income gap has increased 10-fold, the average net worth of African-Americans is $11,800 versus $118,000 for a white family, and black unemployment is twice as worse," said Johnson at the event held in the Washington Hilton Hotel in Northwest ... the economic conditions affecting African-Americans has a spillover to Hispanics ... it's not a political, African American or Hispanic problem; it's a problem for all Americans."
As he continues to diversify his business portfolio, Johnson said on Dec. 15, his primary concern is how African-Americans gain access to wealth. He said they are underrepresented in the equity stock market, don't save and fewer of them have the financial means to buy a home, which translates into a "grave problems for all of us."
Johnson, whose company owns or controls a diverse portfolio of companies in the automotive, equity, hotel, real estate, banking/financial services/asset management, film production and gaming industries, applied what he called 'the Bob Johnson perspective' to his take on the country's recent economic highs and lows.
He, by the nature of his involvement and the circles he moves in, is in a unique position to take the country's economic pulse, monitor trends, develop some of his own, and calibrate ways to keep his portfolio of companies profitable and on the cutting edge.
"I'm on a number of boards and three of them touch the economy in special ways," Johnson explained. He focused on KB Homes, Lowe's and his ties to the hotel and automotive industries to illustrate the highs and lows of the American economy.
"This is a still-stagnant housing market," said Johnson. "Possibly, it has reached the bottom. There are signs people are beginning to be interested in buying homes again and there is increased spending in home construction."
He said that with people losing their jobs, others whose jobs are at risk, and with so many people's houses 'underwater,' home improvement giant Lowe's has been forced to reassess its growth plans.
"People are doing a bath or a kitchen as opposed to a whole house. This means a decline in what people spend per visit," he said.
A consequence of the decline in consumer spending has been that Lowe's top brass has scaled back the number of stores they had hoped to open.
On the bright side of his portfolio, Johnson said, are the hotel and automotive industries.
"Business travel is picking up and occupancy is beginning to show signs of growth," he said. "People are traveling to be face-to-face, and business people are back on the road. Optimal hotel revenue will continue to grow and there will be advantages for existing owners in the marketplace."