In the monthly forecast from noted economist Alan Beaulieu, he noted several positive economic factors that are pushing wholesale distributor sales. Among these indicators are the fact that, although minimal, the economy continues to produce jobs. Alan also noted that the construction market is improving due to more housing starts and higher prices within the industry. Retail sales are also at all-time highs through the middle of the year. Given these indicators, Alan believes the economy will continue to grow throughout the rest of 2013, but that we will experience a mild downturn in 2014.
Alan pointed to the tensions in the Middle East–most notably the unrest in Syria and Egypt–as signals of concern for wholesale distributors as the continued tensions will ultimately lead to higher crude oil prices and higher delivery costs for distributors. On the other hand, due to the increased drilling taking place throughout the US, natural gas prices are expected to remain relatively unchanged in the near future. These lower costs will ensure that utility prices should remain consistent with those of the prior year. For those firms with excess capital looking to make fleet improvements, Alan notes that they could consider transitioning their fleets to vehicles powered by natural gas.
Looking to the future, Alan believes the economy will experience a mild downturn in 2014 for several reasons, including the uncertainty surrounding the new healthcare laws, with the retail industry feeling the pressure first. He expects the dip in the economy to be mild due to the liquidity of assets and low interest rates. The lower interest rates, however, may not be with us for the long haul, as the Federal Reserve ponders how much longer the quantitative easing will last.