Dr. Alan Beaulieu, nationally recognized economist from Institute for Trend Research (ITR) Economics, presented his economic forecast on November 7th, 2018 at the 19th Annual Manufacturing Seminar, presented by Barnes Dennig, Huntington Bank and DBL Law. Beaulieu is a principal, as well as the president of ITR Economics who has provided economic forecasts with 94.7% accuracy since 1985. His pro-business mindset enables companies to reduce their risk and drive profitable business decisions.
Visit our events page here to view the recording and download the slideshow presentation of Alan’s Presentation.
The forecast took place the day after the 2018 midterm elections, and Beaulieu made it clear right at the start that the results of the election did not and would not change his outlook on the future. Since Beaulieu’s previous year presentation in November of 2017, President Trump passed the Tax Cuts and Jobs Act (TCJA). Again, the act did not change Dr. Beaulieu’s long-term view of the economy, but it did, however, shift his forecast a few months back. He stated that the TCJA provided the US economy with a “little boost,” emphasizing that the impact of the TCJA would provide some growth to the economy, but it would only be temporary.
Dr. Beaulieu predicted economic slowdown in 2019 with forecasted GDP growth of 0.5% for the year, bottoming out as low as -1.2%. Some key indicators such as slowed demand, retaliatory tariffs, and potentially higher interest rates point towards downward pressure on manufacturing for 2019. It will be a time for US manufacturers to be careful with inventories, cash flows, and expectations.
Locally, the Ohio and Kentucky economies are expected to follow the trends of the overall US economy moving forward. Both Ohio and Kentucky are currently strong exporters of both machinery and vehicles, with Ohio as the fourth largest machinery exporting state and seventh largest vehicle exporter, and Kentucky as the ninth largest vehicle exporter. Both states are lagging in job creation rate and are in the bottom half relative to the other 48 states. Local manufacturers should be recruiting labor by boasting that the Cincinnati area has lower housing prices than the US median while still offering higher weekly manufacturing wages than the US average.
For his long-term outlook, Dr. Beaulieu predicted a decade of strong economic growth in the 2020’s with plenty of opportunities to grow businesses and make money. Both individuals and companies should be actively investing in equities and capital expenditures now as income, prices, and ultimately interest rates will rise steadily throughout the “roaring 20’s.” This will be a time of social change too. Baby Boomers will be aging into retirement, and millennials will be flooding into positions of economic and political power, almost skipping over the Gen X generation. Despite the forecasted growth in the 2020’s, Dr. Beaulieu expects to see three small recessions in the 2020’s that will merely be tremors before an impending depression in the 2030’s, brought on by inflation, historically high national debt, rising healthcare costs, and major demographic changes. Dr. Beaulieu’s best advice for the depression was to plan ahead while times are good in the 2020’s since there will be a full decade of strong growth to prepare for the times ahead.
Have a Barnes Dennig team member reach out to you to discuss the recap of Alan’s event, and to determine if Beaulieu’s forecasting tools present opportunities for your business. You can contact us here anytime or give us a call at 513-241-8313.