Editor’s Note: Connecting the Dots is a series of monthly conversations with Michael Dominguez, President and CEO of Associated Luxury Hotels International. The series examines issues in the global economy that will “connect the dots” to be helpful not only in business but in life as well.
Michael Dominguez: As we have finally hit the summertime and taking a look at macroenvironments and figuring out what is really happening in this first half of the year, you know, the word I continue to use for everybody is everything is just steady. We're not seeing any kind of tremendous growth that we would have loved to see. We're not seeing this major pullback. It's just a little steady at this point in time.
When we look at overall global numbers, what I feel very comfortable about is the latest reviews from the International Monetary Fund still show us positive with our GDP across the globe. As I like to tell people, I don't worry about the number. I worry about the trend line and the trend lines telling us nobody is forecasting a recession. Ninety days ago, the r-word was being used quite a bit. We just don't see it anywhere in the cards.
McKinsey just released their latest report and what do we see: Manufacturing index is right on long term averages; the producers index is right on long term averages; inflation, not only here in the United States but across the globe, has very much stabilized. We're not seeing any major spikes and that was a concern with what was going on in the tariff arena.
Right now, we don't see it. It doesn't mean it won't be there. It doesn't mean it won't come. But even in the analysis here in the United States, they haven't anticipated increase to inflation a .4% overall with what we know about the tariff environment at the moment. Now we don't want inflation increasing at all, but I'm trying to make sure that we don't overestimate. It's not extreme, it won't be detrimental, it’s not falling off a cliff, and I think that is a very, very important piece for us across the board.
The other piece is employment. Employment globally is stable and it's stable here in the United States. We continue to add jobs. We continue to have unemployment sit right at 4.2%. We have not seen it spike. That is one of the reasons I've said often that I did not believe we would be going into any type of recessionary environment because the one thing that has been common with every recession in the United States is, candidly, very high unemployment. We're not seeing that. It doesn't mean the number hasn't moved much, but it's important to keep in mind that full employment in the United States is 4% unemployment. For us sitting at 4.2%, we’re right at full employment, and candidly, we have more jobs than we do people.
So, right now everything is stable. Everything seems to be good at the midpoint of the year. If the stabilization comes, or stays, and if the stabilization is something that we can see that is going to maintain long term, I really feel very confident that the last half of the year could be very positive and could grow very, very quickly for us.
We were looking for some certainty, although it's not certain, we at least have a little bit of a clearer view of what that looks like. The one caveat I will put out there as of the time of this filming, know that we have tensions with Iran and Israel, which are disrupting the global oil supply. As far as speculation how that transpires, how long this lasts, how big this conflict gets, we'll actually have some disruption or could cause some disruption to this overall macro environment. But as of the time of this filming, we only know what we know, and I tend not to get over our skis. Right now, the word is stable.