COVID-19 Update

Forecasts Mixed for Industry’s Economic Future

GDP growth remains slow, but there’s some level of optimism that things are (slowly) continuing to rebound. But how long will the recovery last? It all depends who you ask.

Beaulieu ran through several markets, giving his predictions on where they’re heading in 2015 and beyond. The industrial side is slowing down, he says, while the service side is speeding up. Real estate, he says, is at the start of a 15-year upward cycle, with a recession in 2018 mixed in during that time.

“This is a great time for you to be aggressive,” says Beaulieu. “Are you reinvesting in your business when the interest rate is so low and the future looks relatively bright?” In terms of real estate, that means looking for urban opportunities with nice views near water. Higher education, says Beaulieu, is “very cyclical” and “likely to go down in the next 18 months.”

The K-12 market, he says, is “in decay [because] municipalities don’t have the money to spend like they used to.” Interestingly, stadiums and other recreation areas at colleges and universities represent “an area where we’re going to spend an awful lot of money,” says Beaulieu.

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“People like to be entertained,” he notes. Retail and warehouse construction is on “a nice rising trend, with a lot more to go,” says Beaulieu, while health care “has been going down since 2008, and [the Affordable Care Act] won’t do much to get that going.”

Office construction has seen double-digit growth for the past four or five years, he says, while houses of worship have been on the decline since 2002. “We’re just not building churches like we used to,” he says. Nursing homes tend to be on two-year cycles and have been flat since 1998, while museums and prisons are down and transit has been down since 2010. Libraries are also down, and dorms are showing “some cyclical rise, but they won’t give you shelter from the coming storm.”

Beaulieu urged audience members to get involved with chemical plants, warehouses and private manufacturing. “If you don’t already participate, you better find a way,” he says.

Outlook Bodes Well for Hiring

The U.S. represents about 22.7 percent of the worldwide GDP, says Beaulieu, followed by China at about 12.4 percent, Japan at about 6.6 percent and Germany at 4.9 percent.

“We’ve been No. 1 for the last 80 years and will stay that way for another 50-plus years,” says Beaulieu, citing our country’s demographics and natural resources as driving forces behind our place at the top of the rankings. Brazil and Mexico are among the countries rising in the worldwide GDP percentages, while Japan, France and Russia are falling.

Beaulieu sees wage rates going up over the next 15 years, and wonders, “how will you retain your talent?” That’s an especially important question considering research shows millennials last less than five years in any particular company on the whole.

He also urged owners to “borrow as much money as you can” as a way of reinvesting in the company, both in talent and in other growth initiatives. “If you sleep through the night, you haven’t borrowed enough,” says Beaulieu.

One thing business owners shouldn’t lose sleep over is thinking the 2019 recession will be as steep as the one in 2008, Beaulieu says, estimating it’ll be closer to the 3 percent drop of the early 1990s. It’ll be driven, he adds, by increasing health care costs, government debt and inflation. Today’s workforce is skewing much younger, says McPheters, with the number of millennials at about 83 million as compared with about 74 million Baby Boomers.

So, given all of these numbers, are you an optimist who will trumpet the potential of as many as 2.5 million new jobs per year, or a pessimist who focuses on global conditions worsening and wages staying low? And what role will you play in the continued recovery, however long it lasts?

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CoronaVirus Update