Tearing out the final page on the old calendar always gets us thinking broadly about the year ahead. How will the economy fare? What are the threats to our expectations? When do we get to stop pretending we’re keeping our resolutions?
This year is no different, and perhaps even more so, given the rough 12 months gone by. Alas, the reason behind the inconceivable year we all just endured also clouds our vision of what lies ahead. The development and rollout of vaccines in mid-December is an enormous cause for optimism, but it doesn’t eliminate the uncertainty about when normal economic life resumes.
Forecasts for this year demonstrate that unsettled outlook. Projections naturally call for growth, given the decline in GDP suffered in 2020. But a sampling of those prophesies covers a wide range, from the low 3 percent area to more than 6 percent. The story is the same when the focus is narrowed to the manufacturing sector. Growth is expected, but how much is unknown.
While rifling through the Internet for some freely available forecasts, I stumbled across a presentation made by ITR Economics’ Brian Beaulieu to accounting firm Barnes Dennig in November. Drawn by the familiar surname (brother Alan is a speaker of choice for several trade groups), I signed up to listen to his in-depth outlook of the year to come.
Brian Beaulieu was, if not outright giddy, decidedly upbeat about the prospects for the economy at large, and the manufacturing space specifically.
“Recovery gets you back to where the growth peak occurred,” he said. “Growth is when you have record high numbers. We’re going to have recovery in 2021, but in 2022 we’re going to have real growth going on again.”
Beaulieu said the driving force of the short-lived but abyssfully deep recession of 2020 is what makes the rebound different from previous downturns. “COVID was a natural disaster, not an economic disaster. COVID created the economic chaos. That matters in terms of how we are going to recover.”
But perhaps the most interesting, and encouraging, aspect of his remarks was not when he looked 10 months into the future, but 10 decades. Leaning on the ITR hallmark of the eternal importance of demographics, Beaulieu said the sun is starting to set on China’s era of spectacular growth. The country will begin shedding workers, losing approximately 100 million every 15 years, which is a huge drag on a country’s economy.
The United States stands in sharp contrast to those conditions threatening China. The U.S. has an increasing population, abundant natural resources and the Rule of Law in its corner, all factors that will keep the country the place to invest and do business.
“The U.S. is going to be the world’s No. 1 economy for the next 100 years. You can take that to the bank,” he said.