Economic Forecasts, common this time of year, are usually boring to me; but a necessary evil as we try to plan for long term success. One of my favorite economists to listen to, because he is both entertaining and accurate, is Alan Beaulieu, President of ITR Economics. Recently I heard him speak at an ACG (Association of Corporate Growth) event and here is his wisdom in a nutshell:
“Be brave, take risks” – The economy is growing and is expected to do so for the next four years (although at a declining rate) and now is the time for strategic investments that can help your organization expand as the economy is. If you don’t know where to invest or how to grow, I can help.
“You should feel good about the economy” – Leading indicators are up, employment is rising, banks are lending, retail sales are rising, non-residential construction is improving, median income is rising.
“Interest rates are going up; it is still a good time to borrow” – Interest rates will go up 25 basis points in 3Q 2015 and 200 basis points in 2016.
“You will pay more for labor” – Job openings are up as there is more hiring and the quit rate is up indicating employees are willing to leave a job for a better one. Labor rates will go up as you pay more for good labor, and good labor is poached, so training costs will go up as well.
“Cap Ex will rise” – More investment in business growth.
“Higher Affordable Care costs sap the consumer” – Someone has to pay for it; Health as a % of GDP from 1990-2013 is high and getting higher.
“There will be a Great Recession in 15 years” – Alan thinks that the combination of unsustainable debt combined with rising healthcare costs will force this economic collapse. Not good news. However, by knowing it is coming, it is possible to prepare for it so you won’t be in the bread lines.
Hmmmm…To learn more read Alan’s new book, Prosperity in the Age of Decline.