Although Beaulieu focuses on the
domestic outlook, he brought up several
points about what’s happening globally
because of the effects those developments will have on this country. For
example, he said that the downgrading
of U.S. credit rating means little in the
international picture.
“With all the uncertainty going on in
Europe and other places, the bond market still favors the U.S. It’s a safe haven
for investors,” and a downgrade will not
bring skyrocketing interest rates or a fall
in the U.S. dollar as newscasters predicted, he said.
He also brought up what’s happening
in China, where inflation is significant.
“We can’t ignore what’s going on [in
that country], because we will eventually
feel the pain. Inflation will come to the
U.S.” in the form of higher prices for
many consumer goods, Beaulieu said.
Still, China and many other areas of
world are currently losing some of the
advantages that made them so appealing
a place to do business at the same time
their economies are in need of additional
goods.
“That should translate into business
for you, including more export business,” he said.
As far as what’s happening on this
shore, Beaulieu said to look at:
Employment. Instead of looking at
the unemployment rate (which was 9.1%
at the time of the workshop) corporations need to focus on how many jobs are
created in the private sector. At outlook
time, that number was about 157,000
jobs per month, and anything over
100,000 is a favorable figure, he said.
“When jobs are created (as opposed to
lost), that means houses are paid for,
kids are going to school, people are buying.”
Lending. Another good piece of news
in this country is that banks are lending,
Beaulieu said. “Delinquencies are down,
the money supply is expanding. That’s
economic activity, not a double dip.”
Interest rates. Along with the inflation rate, interest rates will begin to
move up and will continue to do so for the
next 20 to 25 years, Beaulieu warned.
Most people in business today don’t have
Corporate Profits - 1st Quarter (Billions of $)
$378.4
$362.7
Financial
$141.6
Manufacturing
$280.6
$250.4
Retail trade
Information
$141.0
$124.0
$129.1
$97.7
$123.3
$112.9
; 2011 (1Q SAAR)
; 2010
; 2009
Wholesale trade
$69.6
$73.5
$91.5
$103.9
Utilities
Transportation
and warehousing
$31.9
$41.5
$37.7
$37.3
$39.4
$26.9
$0 $50
$100 $150 $200 $250
much experience with this pressure; however, “we are returning to the 1970s,” so
look to what happened during that time
as an example of what to do.
FORECAST: The rate of recovery will
slow in 2011, but continue to climb in
2012 and then flatten out in 2013,
when the next recession will begin.
The years 2015 to 2017, however, will
create new opportunities. Beaulieu
said his prediction of a depression in
the 2030s is still on target, but that a
lot will depend on whether Congress
is able to do anything in the next year
about the U.S. budget woes. “2012
could be a very interesting year to be
alive,” he concluded.
WALL STREET:
A NOTE OF CAUTION
Although Michael Halloran, vice president of Robert W. Baird and Company,
agreed with other speakers that “the
market has certainly thrown us for a
loop,” he said caution, not panic is in
order.
“I think it’s important to start with
the fundamental tenet that industrial
companies are not seeing weak trends at
all; there are markets that are weak and
there is deceleration in growth rates, but
demand is pretty healthy when you look
at the overall industrial picture,” he told
attendees.
The industrial economy is entering a
mid-cycle slowdown after seeing growth
rates peak in 2010—growth in the U.S.
turned positive in March of 2010 and
peaked in December of that year. Since
then, trends have generally moderated.
Globally, trends have been on a similar
trajectory and currently remain at
healthy levels, Halloran said.
