Dr. Alan Beaulieu, an economist from Institute for Trend Research (ITR) Economics, presented his economic forecast on November 9th, at the 17th Annual Manufacturing Seminar, presented by Barnes Dennig, Huntington Bank and DBL Law. Dr. Beaulieu is a principal, as well as president of ITR. He has provided economic forecasts with 94.7% accuracy which enables companies to improve their performance and profits.
With the presidential election complete, Dr. Alan Beaulieu led off the seminar stating that the outcome of the election the night before his speech did NOT change his economic forecasts. Regardless of the presidential outcome, 2017 and 2018 will be good years with a mild recession in 2019. Whichever candidate won the election will be a one-term president as they will be blamed for the recession in 2019.
Instead of focusing on the political outcomes, Dr. Beaulieu wants us to focus on the positive year ahead and to remember that the US is in a better place than most Americans believe. With 2017 being a growth year, Dr. Beaulieu projects inflation and interest rates going up. Interest rates going up to 6.25% to 7% isn’t bad, but actually a good sign. As interest rates increase, it spurs consumers to spend money on items such as homes and cars before interest rates climb again. With the growth year, it is important for businesses to invest in themselves for the future and to raise prices in 2017. Dr. Beaulieu did warn businesses that there will be no tax cuts regardless of what platforms the presidential candidates ran on. While the corporate rate might go down, the exemptions and deductions labeled as loopholes will be removed. Plan on taxes going up, but be proactive in trying to mitigate taxes.
Dr. Beaulieu stated that manufacturing is coming back. Manufacturers such as GE and Thomasville Furniture have brought back manufacturing from overseas not for patriotism, but because it is a better place to do business. The important aspect to remember is that while manufacturing is coming back certain manufacturing jobs may not come back due to creative destruction. Creative destruction is inevitable as companies become more efficient and productive. The only solution for manufacturing is to automate as much of the work as possible due to the fact that the workforce will continuously demand more money which inevitably raises costs. Companies are now facing the biggest dilemma of how to hire and retain employees, which has been felt by many clients who are struggling to find and retain a skilled workforce. Dr. Beaulieu urges manufacturers to combat the problem by banding together and promoting manufacturing jobs in Cincinnati. Companies need to show not only how manufacturing jobs have changed and are more desirable now, but also how Cincinnati is a great place to live with reasonable home prices and competitive wages.
While Dr. Beaulieu had a positive forecast for the upcoming year, he reminded us all of the impending severe depression forecasted to hit in 2030. He urged us all to add 14 years to our age and think of where we will be. While we cannot stop the severe depression, we can set ourselves up to survive the depression. An example he provided is that jobs in manufacturing medical devices will be more recession proof than selling luxury items. As always Dr. Beaulieu left attendees with plenty of information to help shape their future business plans.
Barnes Dennig is committed to helping provide resources to businesses to help lead them to success in the future. If you would like a copy of the 2016 Manufacturing Compensation & Benefits Benchmarking Study, or to request an audio recording of the panel, have a member of the Barnes Dennig team contact you here, or call (513) 241-8313.