The CPA panelists included (from left) Marty Einhorn, Dave Cotton, Clare Levison and Gary Thomson.
Einhorn: Our economy [in South- eastern Virginia] is dependent on the government, our naval base, and that is both a blessing and a curse. The blessing being we don’t dip as low as the rest of the economy in the state or nationally when there is a recession because the government tends to remain relatively steady, except for our recent sequestra- tion, which really hasn’t affected our economy that much. Also, by the same token, we tend to rise a little bit slower and not have as high of a peak. There’s a lot of activity in our area, a lot of construction … a lot of new jobs coming into the area. So I believe that is contrib- uting to the optimism.
Levison: For Southwest Virginia, you saw infrastructure and geographic loca- tion mentioned in the survey. [Those] probably [are our] two big issues that [impact] Southwest Virginia. There’s not the same level of infrastructure that you see in the rest of the state. There are not as many options. We love our part of the state. We think it is beautiful, but if you have an economic situation, a job loss, a downturn, things like that, you don’t have as many second choices to turn to as you do in some of the other parts of the state.
own home budget, their own personal finances, their own pocketbook. We can put out all of the statistics that we want to, but if the average person isn’t feeling it, then it doesn’t mean a lot. We’re start- ing to see that the average person does feel the economy is moving in the right direction, which is a really good sign.
VB: Southeast Virginia CPAs have a more favorable view of the economy, 55 percent, while only 34 percent of those in Southwest have a favorable view. What do you think accounts for these differences?
Cotton: I’d like to echo Marty’s senti- ment about the government. Northern Virginia is probably more dependent on government than Norfolk and despite sequestration [and] deficit spending, the government continues to spend money. If your primary customers are entities that can print money, then it kind of immunizes you from economic stress in the economy.
VB: More than half of the CPAs responding [in the survey] expect their clients to see adverse effects from the new Department of Labor [DOL] overtime rule. Could you comment on what effects you’re seeing with your clients?
Thomson: I don’t think businesses operate well in uncertainty. When we had the Affordable Care Act passed and we were waiting for all the implementa- tion, there was a great deal of uncertainty,
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a great deal of pessimism about what that was going to look like, how that was going to cause businesses to restructure. I think the same type of thing is going on with the DOL overtime standards. There’s a great deal of uncertainty. Businesses are looking to how they can restructure the labor force, and again when you’re in that period of uncertainty, despite the fact that I do think as CPAs we’re more optimistic, businesses gener- ally get very defensive and at times pes- simistic until we actually see these things rolled out. I think it’s a natural reaction to the uncertainties.
Einhorn: I also believe that a lot of the uncertainty concerned about this law is based on the timing … We’re gradually climbing out of [the Great Recession] and then to have these rules hit, there’s a lot of fear that this might slow us down or maybe turn us in the other direction. I think that has something to do with it.
Cotton: We’re also in a larger transi- tion in terms of the employee/employer relationship. People now are asking for more flexible schedules. Not everybody wants to work the traditional 40-hour week, and I think employers are having to accommodate, adjust and acclimate to that new structure of the relationship.
VB: Last year, more than 40 percent of respondents said small businesses did not have access to adequate credit. That percentage fell to 30 percent this year. Has the credit market improved?
Cotton: We’ve had a substantial increase in government regulation of the credit market with [the] Dodd-Frank [Wall Street Reform and Consumer Protection Act] and Consumer Financial Protection agency, and I think it is more difficult to get financing approved in that greatly increased regulatory environment.
Thomson: Generally speaking, it has improved, but [there are] alternative sources of financing and capital out there that have become a greater part of our economy … I think the natural economic forces of alternative sources of financ- ing — money being on the sidelines for a long time — have opened the doors
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