At this week’s NFPA Industry and Economic Outlook Conference in Wheeling, Ill., 300 attendees from fluid power manufacturers, distributors and users heard a somewhat mixed message from the economists who presented, but Dr. Alan Beaulieu, President, ITR Economics, had a more positive long range message for future growth.
Beaulieu started off by telling the crowd that “You’re going to have a better year next year than you did this year.”
But 2016 has turned out to be a worse year for the industrial sector than economists predicted, with mining being a particular drag on things. Beaulieu stressed that the presidential election this year will not affect the forecast.
“Whether it’s a democrat or a republican, isn’t going to change the outlook for 2017 because it really doesn’t matter,” he said. “It takes a while for anybody who’s elected to have an impact.”
Beaulieu said that, from World War II on, his firm studied where the economy does better, under Democrats or under Republicans.
“It’s statistically insignificant. We’re just as apt to have recovery under a Democrat or a
Republican. We’re just as apt to have a recession under one or the other,” he said.
Interestingly, Beaulieu, said, 53% of Americans think that China is the largest economy on the planet, but they’re wrong—by a long shot. The U.S. remains the largest, with 24.5% of the world GPD, compared to China’s 15.0%. (Japan and Germany come in next, at 5.6% and 4.6%.)
What’s more, our share of the pie has increased over the past year.
“We are alive and vibrant and doing well. We’re not old and dying,” Beaulieu assured the audience.
Oil and gas has been a challenging sector, said Beaulieu, and we have really curtailed production in the U.S. Some of that has been painful, but some has been good, too.
“For right now, the good thing is that we, and other nations, are cutting back on production, mostly non-OPEC,” he said. “As we’re cutting back on production, that’s taking care of the glut that’s out there in the world. As we’re beginning to take care of the glut … these prices are going to be seeing some more upside pressure.”
But this eventual upward pressure, combined with the increased reliance on renewables, will mean that eventually all other costs will go up, leading to inflation. Beaulieu said to expect some mild inflationary pressures in 2017.
Beaulieu feels that overall, the U.S. is in good shape and poised for growth for the next 14 years He said we’ll have our minor recessions, but nothing really bad will happen until a predicted major depression in 2030, which is tied to global demographic trends and a massive amount of retirees then.
“In between, you need to be aggressive,” he said. “You need to hire, you need to train, you need to optimize, you need to make sure your marketing’s in place, your competitive advantages are in place. … If you do all of those things and plan for higher profits, you’re going to find yourself ahead of those who are still waiting.”
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