By Trishna Shah, CPA, Staff Accountant
Economist Alan Beaulieu has been forecasting a mild downturn in the U.S. economy in late 2013 and 2014, but he sees opportunity for distributors to profit despite the macroeconomic environment. “Especially in the first half of the year,” he wrote in the December issue of the NAW Advisor.
Beaulieu cautioned in the November issue of the NAW Advisor that income taxes will rise in 2013, which will contribute to the economic downturn late in the year and into 2014. With the FICA rollback expiring, Medicare tax rate increase, and the expansion of the Alternative Minimum Tax on an additional 26 million U.S. households, those “closest to the end user will feel the pain first, but it will not take long for the negative feedback to affect most,” Beaulieu wrote
Distributors can position themselves to succeed through the downturn by being aggressive now – borrow money while banks are willing and able to lend it, implement cost-saving and efficiency measures, and work hard to fill your sales pipeline.
“Even if we assume a worst case scenario and the country does go over the fiscal cliff, that does not mean you will wake up on January 1st in a recession,” Beaulieu wrote in the December issue. “In fact, the name ‘fiscal cliff’ is something of a misnomer, but I suppose ‘fiscal gentle decline’ doesn’t quite pack the same punch. Most of the tax increases and spending cuts will be felt over the course of the year; only toward the end of the year will their cumulative effects be evident in the economy. Because of this, wholesaler-distributors need to wake up on January 1st ready to do business.”