I attended the 2014 Annual Manufacturing and Distribution Seminar in Cincinnati on Wednesday. Alan Beaulieu, the internationally recognized economist who’s made a career out of accurately predicting economic and business trends with a good dose of humor and a strong belief in Austrian economic policy spoke to an enthusiastic audience.
Here’s what he had to say about 2015 and beyond:
The Important Leading Indicators are all Pointing Up:
- World is relatively calm.
- Employment is rising.
- Banks are lending.
- Retail sales are rising.
- Non-residential construction is improving.
What Alan said about Ohio:
- Ohio is second only to Texas in terms of our ability to attract business and in the number of expanding businesses in our state.
- Solid business climate overall.
- Virtually all small businesses are eligible for a 50% tax rate on their first $250,000 of income.
- Unemployment rate for Ohio is 5.6% (2014)
The Overall Economic Outlook for the Country:
- The Next recession is likely to be in 2019 but it will be a manageable one.
- Changes in the political landscape are not likely to change the economic landscape.
- According to the U.S. Census the middle class in America is growing.
- Although the debt is narrowing, we have not fixed the problem because, to date, citizens and politicians have no appetite for austerity. Therefore, US deficit spending continues and will pose serious challenges in the future.
- Manufacturing in the U.S. is now only 5% more expensive than in China.
- U.S. annual auto exports are skyrocketing!
- U.S. dependence on foreign oil is declining.
- Corporate bond prices are looking up, this is a good long term sign.
- Unemployment rate for U.S. is 5.9% (2014)
- U.S. is spending way more per capita on our aging populations than other developed countries.
- The 2030’s we will experience serious economic problems. These problems will affect the U.S., Europe, Japan, and China. Mexico however will weather the storm quite well, as will Australia. The economic crisis of 2009 was just the band warming up for a much bigger crash in the 2030’s.
Business Specific Recommendations:
- Goods and service businesses should do well, in the coming economy.
- Aerospace is a good place to be.
- Lack of a well-trained workforce will be a challenge especially in the trucking industry. Implications for business will include the need for more training, higher pay, and it will be harder to find good people.
- Automate as much as you can to reduce internal inefficiencies.
- B2B is a good place to be right now.
- Opportunities in multi-family rentals.
- There will be opportunities in manufacturing jobs. Skilled machine operators can make $80,000 per year.
- In general terms, Gen X (born between 1960- 1980) will suffer the most from economic ills, millennials (1980-1995) will have it relatively easy. The Gen X group will experience higher taxes and less upward mobility.
International Recommendations and Insights:
- The Mexican middle class is growing so there will be significant economic opportunity there.
- Canada will have a balanced budget within the next year. Their approach-they over estimated their expenses in 2014, so they cut expenses by 20% to create a surplus, instead of just finding new ways to spend the money. Canada will be a good place to invest.
- Europe will have a balanced budget or close in the future.
- Opportunities exist in South America and India.
- China’s Debt is a growing problem for their economic future.