It's a recovery - for some.
Nordstrom's shoppers are buying more; Wal-Mart shoppers are hurting.
Manufacturers, from 3M Corp. to Evraz Claymont Steel, are boosting sales and profits and making hires; drugmakers are spending billions on mergers and acquisitions.
But home prices are still falling, and construction crews are idle. Gasoline, at $4 a gallon, is keeping tourists and delivery trucks home. Local banks are struggling and reluctant to lend. One in 11 American workers has no job.
What's it add up to?
"There's never been a better time to start a company," Chris Fralic told a Drexel University hall full of business professors Friday.
Fralic, who holds degrees from Villanova and St. Joseph's, built a 25-year computer career into a partner's role at First Round Capital L.L.C., one of the busiest U.S. venture capital firms, with offices in San Francisco, New York, and West Conshohocken.
He knows the v.c. business isn't what it was in the high-profit 1980s and '90s. "It hasn't even returned investors' money in the last 10 years," he told the crowd, smiling. "It's a failing asset class."
Until, suddenly, it isn't: "LinkedIn changes everything," Fralic said, citing the high-priced debut of the business-oriented social-networking and job-recruitment site last week. "It's like Netscape in 1995," he said of the online service whose pricey IPO sparked mass investment in Internet, software, and wireless companies.
LinkedIn made just $2 million in profit, on sales of $94 million, last quarter. But the New York company has grown rapidly, and the stock is worth nearly $10 billion, boosting valuations for Facebook, Twitter, Groupon and other still-private social-networking sites.
It costs less to start new tech companies than ever, Fralic says, citing the proliferation of "completely mobile" new cloud-computing, iPhone-application, and social-media businesses that require brains and long hours, not sprawling warehouses or lines of credit.
He cited the example of Nat S. Turner and three other First Round-backed Penn students, who founded Web ad-sales site Invite Media in their dorm rooms during the recession, and sold it to Google last year for more than $70 million. Tell your students it's time to work for themselves, Fralic told the profs: "Break the big-company myth."
Rich and poor
For most Americans, the economic recovery is "a long slog, and uneven," says
, chief investment strategist at
Janney Montgomery Scott L.L.C.
, the Philadelphia-based stock brokerage.
Giant corporations have cash to spare. Recent deals, just to name three in Chester County, include Johnson & Johnson's $21 billion offer for medical-repair gear-maker Synthes, Teva Pharmaceuticals' nearly $7 billion deal for drugmaker Cephalon Inc., and Stryker Corp.'s $300 million-plus pact to buy bone-replacement developer Orthovita Inc. DuPont Co. completed its biggest deal in a decade last week, for Europe's giant food-preservatives-maker Danisco.
"The big companies that made it through 2010 cut their costs, and they made a lot of money, and they're beginning to invest it," Thomas Bonney, managing director of Old City-based CMF Associates, a deal-valuation adviser and financial-executive recruiter, told me.
But among smaller companies where most new jobs live, deal-making and investment is still slow. Sales of companies with revenue in the $10 million to $250 million range totaled just 29 in the first quarter, down by half from prerecession levels, says Andrew Greenberg, chief executive of GF Data Resources L.L.C., of West Conshohocken, which tracks deals by more than 150 midmarket investment banks.
For one thing, it's tough for would-be owners to finance business purchases. "The rest of us had a recession; the banks had a near-death experience," Greenberg told me.
Among local banks that used to lend to local businesses, Wilmington Trust and Harleysville National are gone, and National Penn and Beneficial had to cut back. Larger banks seem uninterested in smaller businesses, and new entrants like M&T and First Niagara have yet to fill the gap.
But General Electric's finance division and other specialty lenders have begun prospecting among small and midsize companies again, Greenberg said, hopefully.
With U.S. businesses hiring a modest 200,000 new workers a month, "recovery is happening at a pace nobody's satisfied with," Janney's Luschini said. Especially among young adults 18 to 25 years old, "the unemployment rate is much higher than you would expect to see."
"[Yet] the jobs getting created are really good jobs," in high-skilled technology and manufacturing positions, says Bonney, of CMF, which also runs a placement service for corporate controllers and financial executives.
"We're losing the lower-value jobs and government jobs, and they're being replaced by value-added jobs that are sustainable," he told me.
But it's hardly an even trade. "People 35 to 55, people in their prime, who have kept up their skills, are getting offers, and the pricing is strong," Bonney concluded. "But if you don't have the skills, it's going to be a struggle."