EXECS ON ELECTION: NO CHANGE IS GOOD NEWS
NEW YORK — Hail to the status quo.
Although Washington skirmishes undoubtedly lie ahead on such key issues as tax reform and trade, retailers and others in the fashion industry were pleasantly unsurprised by the outcome of Tuesday’s elections, citing the Republicans’ continuing control of Congress as a plus for the business community.
Furthermore, the general endorsement of incumbents, including President Clinton, gave evidence, for the most part, of a contented populace that should be in a spending mood once Christmas is in the air.
“I think it’s a positive election in that there’s really no real change,” said Allen I. Questrom, chairman and chief executive officer of Federated Department Stores, adding, “Congress is going to be pretty much the same, give or take a few seats.”
In Questrom’s view, the continuity will be “pretty good for our economy and our business. Business and economy don’t like major changes.”
“The American public saw the President as doing a good job, the economy was good, which was a key issue, and the Democratic programs were clearer from a national perspective,” Questrom said. “The public supported the President in his messages, which I think is not that far away from the Republicans.
“What I hope comes out of it, what I hope the election says to the elected officials, is that we don’t want any extremist views,” Questrom said. “We want to go down the center.
“Both Democrats and Republicans this term should be working together to get things accomplished,” he added. “The disagreements [in the House of Representatives] in 1996 were more political. This could be a much more effective Congress in terms of getting important legislation passed.”
“The outcome was not a great surprise, so I would suspect the outcome would not have a major impact on what is going to happen,” said Stephen Elkin, chairman of Bergdorf Goodman. “Wall Street yesterday seemed encouraged by the outcome and hopefully the consumer will be.”
“The continuum in the White House and houses of Congress is favorable for retail and will bode well for the Christmas season,” agreed Philip Miller, chairman and chief executive officer of Saks Fifth Avenue.
“I was very pleased to see the Republicans retain their hold on the House and the Senate,” said Thomas Gould, vice chairman of Proffitt’s Inc., the rapidly growing, 140-unit retailer with annual sales of about $2 billion.
“We feel very good about the improvement in the U.S. economy as a result of the fiscal responsibility shown by the Congress,” Gould added. “We weren’t surprised by the outcome, but we find it very reassuring to business and to the nation.”
Maurice Marciano, chairman and chief executive officer of Guess, was similarly upbeat about the results of the election.
“If you look back at the last two years, the balance between the Republican houses and a Democratic president has worked well,” he said.
“In the first two years of the Democratic presidency nothing was happening, and there was more gridlock.
“But the last two years, they passed a lot of new laws because the President has had to make more compromises.
“The Republicans are more inclined to look at things from a business point of view, and this helps as long as the President continues to compromise.”
Arie Kopelman, president of Chanel Inc., noted that with Clinton’s re-election balanced by the Republicans holding Congress, “people are breathing a sigh of relief.” He said, “Americans are more comfortable without one side running amok.
“My belief is that now there will continue to be a move toward a more balanced budget, and inflation is going to be contained. It looks to be a reasonably solid, if not buoyant, economy for the next four years. There won’t be either an erosion of profits or a big explosion in the stock market.”
Nevertheless, the threat of a recession within two years or so is in the forecasts of many analysts, as simply a function of the business cycle. And that threat is not overlooked by the retailers.
Said Federated’s Questrom, “If there is a recession in 18 months or a year, it would not matter which man got elected. If there is a recession — and historically there’s going to be a recession — we have in place a group of people that can work together to minimize the negative of it. This continuity I’m talking about won’t prevent something like a recession, but can help by being proactive.
“We have to deal with these cycles,” Questrom added, referring to the economy. “What we don’t want to see happen is have interest rates go up and aggravate the potential for a recession. We do have a slowing down of the economy that has been apparent for the last several months. A balanced budget is critical to keeping interest rates down, and that’s good for the economy.”
Meanwhile, the feeling of comfort was evident along Seventh Avenue and environs — how comfortable depending upon the individual’s own political leanings.
Richard Warren, co-president, Warren Group, said, “I don’t expect much change. We probably will see a little post-election bounce, and we’ll have a good Christmas and some momentum going into next year. Consumer confidence should remain as good as it’s been, even gradually improving.”
“I’m happy because we have a balance,” said Kenneth Zimmerman, chairman, Kenar Enterprises. “The Congress is still Republican-controlled and Clinton has been a good president, so we know what to expect. I believe the economy will keep going strong, without major drops or booms, in the next few years.
“It’s the lowest high I’ve ever seen after a presidential election because it was no contest,” said Bud Konheim, president, Nicole Miller. “People voted the status quo, which means the economy shouldn’t see a significant change in the near future. Four years ago, Clinton promised he was a new Democrat, and he kept his promise.”
“I’m thrilled that Clinton was re-elected,” said John J. Pomerantz, chairman and chief executive officer, Leslie Fay Cos. “The economy is pretty good, and he’s got to be given credit for it. You know he would get the blame if the economy was not good. I think he will continue to focus on deficit reduction and holding down interest rates, which leads to a generally healthy economy.”
Erwin Pearl, owner of the fashion jewelry firm bearing his name, joined in the chorus of approval, “I really feel quite optimistic, economically, there is a positive outlook now. We have low interest rates and Wall Street has expressed its confidence in the current administration. Even if Dole had been elected it would be the same.
“Clinton’s policies are very moderate, and we have a Republican Congress to balance things out,” he said. “Hopefully, [both parties] have gotten the message that they must work together, confrontation serves no one.”
“Now will be the true test of how good a president Clinton really is,” said Abe Chehebar, chief executive officer, Accessory Network, who said he doesn’t expect much change that would affect the industry. “At the end of the day, business has been good under the Clinton administration.”
Chehebar acknowledged that second terms are rarely noteworthy, but said he believes Congress and the President have gotten the message that the public expects them to work together.
From the viewpoint of organized labor, Jay Mazur, president, UNITE, said that despite the failure to win Democratic control of the House, “We did well.” As for the future, he said, “We will continue to be proactive across the board.
“We’ll try to build a better understanding of trade union rights among the politicians in our government, hoping to affect policies such as linking worker rights with all trade pacts and eradicating sweatshops here and abroad,” Mazur said. “We think President Clinton recognizes the role of labor more now than four years ago, and we’ll continue to try to sensitize him to the issues.”
As for trade issues in general, however, industry executives saw a continued move to more liberalized commerce in one form or another.
Said Questrom of Federated, “We will continue to be proactive because America has a lot to benefit from being proactive on trade.”
“The issue of trade policy is a major concern, but again I don’t see major changes,” said Zimmerman of Kenar. “We’re in a global market, and you cannot protect an industry like sewing clothes while larger industries like automobiles, airplanes, computers and intellectual services flourish in the world market. There will likely be an attempt for some protectionism, but I don’t see Clinton letting that happen, because he believes in free trade.”
Konheim also agreed that Clinton believes in free trade “and will not revert to protectionism — nor will Congress let him.”