My take: Things are turning around, slowly but surely

Home Editorials My take: Things are turning around, slowly but surely

by Steve Feldman

I’m not an economist. Never professed to be. Simply not smart enough, don’t have the time. I’m guessing many of you sail in my boat.

But I am smart enough, and have enough time, to follow one economist— well, two: The Beaulieu brothers who comprise the Institute for Trend Research. Why them? Because they are correct 96% of the time. Their website says so. I’ve had the fortune to see both speak at NAFCD conferences, and, while I can’t attest to the 96%, they always seem to be spot on.

So, what they are saying right now? For the short term, stock market volatility will remain, unemployment will take a long time to climb out of its hole, and inflation and interest rates will rise. Instead of having this cycle [of past recessionary periods] where households spend more and employment rises, we are in a more stagnant position.

The good news is based on leading economic indicators—which include the availability of private equity, slowly rising employment and a normal rise in retail sales— the Beaulieus expect the economy to grow through 2013 before dipping into mild recession in 2014 followed by three years of growth. I’ll take five good years out of six any day of the week, and so should you.

One caveat: The Institute subscribes to the Austrian school of economics that believes an economy left to its own devices will grow. “The question is not what will make our economy grow. The question is what are going to be the inhibitors.”

Now, before you go celebrating, here’s the really bad news. A deeper recession will follow in 2018-19 if nothing is done about the U.S. deficit, Brian Beaulieu said. And the Institute is predicting another Great Depression in the 2030s as a result of demographics and “an inability to cure the ills of Social Security and Medicare.”

But that’s 20 years out. For now, you should note that even though you may not feel it, we are in a period of slow growth. That sentiment is substantiated by top executives around the country, who do not see a contraction or recession. The situation does not seem nearly as dire as it did during the credit crunch during the last recession. “This is a lot different than 2008,” said Jeff Immelt, CEO of General Electric. “There’s liquidity; there’s pockets of growth. Recovery is under way, but it’s a long, slow recovery.” And ExxonMobil Corp’s Rex Tillerson, assured, “We will have positive growth, but not as positive as we hoped.”

Data released earlier this month backed up their guarded confidence, showing a pick-up in consumer spending and modest improvement in employment. And major U.S. retailers, including Kohl’s and Nordstrom, reported stronger-than- expected sales in September, on average up 5.1% at stores open at least a year.

What should you do? Since short-term interest rates are extremely low, Beaulieu advises to get over fears of the past and borrow as much as you can to expand businesses. He also suggests buying real estate such as rental properties because more people are going to be renting than buying a home.

States that are forecast to have net migration growth are good bets for busi- ness expansion, he said, led by Texas, North Carolina, Arizona, Georgia, Florida, Washington and South Carolina. Avoid New York, Michigan, Ohio and Idaho, which are losing people.

Finally, fears of China becoming the largest economy are unfounded. The U.S. economy makes up 23.3% of world gross domestic product compared to 9.3% for China, while the U.S. has just 5% of the world population. “Five percent gets to enjoy 23.3% of the economy,” he said. “At ITR, that’s what we call a blessing.”

Must Read

NAFCT names board of directors

Gray Court, S.C.—The recently formed National Association of Floor Covering Technicians (NAFCT), a non-profit 501(c)(6) trade association founded by Sonny Callaham and Paul Pleshek...

CTEF schedules first certification testing event of 2021

Vero Beach, Fla.—CTEF, the Ceramic Tile Education Foundation, has scheduled its first Certified Tile Installer (CTI) hands-on testing event for 2021 at The Carpet...

Xpress Global Systems names new interim president

Chattanooga, Tenn.—The board of directors of Xpress Global Systems (XGS) has named Dale Davis interim president and COO, effective Nov. 1, 2020. Currently COO,...

Schönox unveils webinar schedule through December

Schönox HPS North America, Inc. has launched its October lineup of online technical training and seminars. The sessions provide opportunities to learn about the full...

Mohawk Group unveils digital summit lineup

Calhoun, Ga.—Next week, Mohawk Group will host its inaugural DesignFWD Education digital summit. On Wednesday, Oct. 28, education designers, facility managers and other attendees...

Tile of Spain names top fall trends

Miami, Fla.—Tile of Spain, the international brand representing 125 ceramic tile manufacturers belonging to the Spanish Ceramic Tile Manufacturer’s Association (ASCER), has released what...