(which was 9.5% at the time of the outlook workshop) has acted as he predicted last year, which was to stay high, and
it may stay that way for awhile, he said.
“You have to look at how many jobs
are created in a month. When we get to
200,000 to 300,000 jobs a month,
that’s a real recovery,” but at that rate
“it will take us three years to create all
the jobs we lost, and there is no government initiative out there to help,” he
pointed out.
Still, there are many signs that are
more positive, Beaulieu said, starting
with the lending situation. As far as
commercial lending, which is still tight,
the competition will begin to heat up
soon, and when that happens, standards
go down and credit loosens, which “is
grease for the economic engine and
good things begin to happen.” In the
consumer realm, this is already occurring, he pointed out, and commercial is
usually right behind.
Regarding inflation, Beaulieu origi-
nally predicted it would begin in 2010,
but now says “it will hold off until the
second half of 2011, but it’s coming.”
Interest rates are at an all-time low,
though Beaulieu predicted the trough
would be reached soon and then rates
will creep upwards until the 2030s,
when they may be as high as the Carter
years. He advised attendees to “borrow.
Invest in anything that will drive your
efficiencies and do it in the next six
months.”
Meanwhile, manufacturing “is com-
ing back with a vengeance,” he said,
pointing to the U.S.’s industrial produc-
tion figures as well as GDP (gross
HIGHLIGHTS AND COMMON THEMES
; Stimulus packages have helped: Beyond the water/wastewater industry, several other U.S. industries have been helped by federal stimulus, especially
those that have to do with building infrastructure. Speakers also pointed out,
however, that stimulus packages in other countries have benefited North
American industrial manufacturers by creating new markets.
; Take advantage of low interest rates: Several presenters pointed out that
the nation is not likely to see interest rates as low as they were at the time of
the fall 2010 workshop anytime soon. While credit is still tight, it’s about to
open up, speakers said, so companies should look for ways to take advantage
of that situation.
; Global warming concerns will affect most industries: Almost every speaker
this year talked about greenhouse gas and other environmental concerns as
well as the possibility of new legislation both at the state and federal levels.
From the fact the nuclear industry may benefit because coal is getting a bad
reputation, to the effects the Deepwater Horizon disaster will have on
drilling, speakers shared new possibilities about what might happen.
; China has become a better consumer; Brazil a good place to do business:
Although it’s still tough to enter the Chinese business world, the country has
become a better place to sell for some industries, such as the pulp and paper
market, where production of paper goods cannot keep up with Chinese
demand. Meanwhile, several speakers talked about developments occurring
now in Brazil, including recent discoveries of massive oil deposits in deep-sea, “pre-salt” layers of the earth. Attendees were encouraged to look into
finding partners in this business-friendly country.
domestic product) figures that measure
rates of change going forward. Both are
trending upwards, and demographics for
long-term success are favorable in the
U.S., he said. For example, the United
Nations predicts this nation’s population
will grow to 400 million (from 300 million today) by 2050, which compares
favorably to places like China, with its
birth restrictions and Russia, where the
average age is increasing.
Still, Beaulieu had one piece of news
that had the audience groaning—he
looked down the road 20 years and
announced that another great depres-
15
US Industrial Production to Gross Domestic Product
3/12 Rates-of-Change
15
10
10
sion is coming—brought on by many
factors such as high interest rates, inflation and a government that owes too
much. “This won’t be our problem
[referring to those at the workshop
because of their age], but it will be the
problem of the generation behind us,”
he said. (Editor’s note: Read our interview
with Alan Beaulieu in “Conversation with…”
on page 52 of this issue.)
However, he ended by saying that
proactive companies, those that look at
leading indicators and how their particular companies fit into the current economic picture, will win out over the
competition.
“Don’t wait for anyone to make your
future. It is up to us to what happens to
our world,” he said.
6
6
0
0
- 5
- 5
- 10
’98 ’00 ’02 ’04 ’06 ’08 ’ 10
GDP
US IP
- 10
-15
’82 ’84 ’86 ’88 ’90 ’94 ’96
Source: Institute for Trends Research
-15
’ 12
FORECAST: The stock market will return
to a bull market going into 2011 and the
economy will continue to expand for
another six months, but this will not be an
easy market in which to make money.
Equity will offer a better return than
counting on inflation (rising prices). Once
inflation hits, lack of spending power may
become a problem.
