When Alan Beaulieu finished his keynote remarks at Steel Market Update’s Steel Summit in August, the semi-attentive listener could have come away fully enthused about the state of the industrial economy. Or thoroughly depressed.
Beaulieu’s assessment of the economy was a veritable hodgepodge, offering positive and negative signals in near-equal measure.
The optimist could focus on these conclusions:
There will be no macroeconomic recession in 2020. Unless something terrible happens in terms of international relations, a condition which occasionally teeters on a tweet’s edge, the U.S. will not experience an economic slowdown next year.
For the manufacturing economy, 2020 will actually represent growth due to a strong back half. “You will see more orders. You’ll need more inventory. You’ll need more of everything as we head into the second half of 2020,” he said.
Growth will continue into 2021, with Beaulieu forecasting 2.3 percent GDP in the year after next. The record expansion will push well past a decade.
When the USMCA is eventually ratified by Canada and Mexico, as it should be, the deal will be a good one for North America. All three countries stand to benefit.
The consumer will continue to bolster the U.S. economy.
Then there’s the flip side. For the pessimist in the crowd, Beaulieu also had quite a bit to munch on.
We will have a technical recession in industrial production during the next nine months.
“Everybody from service centers to producers to everybody in between is going to slow very noticeably over the next three to four quarters,” he said.
The long run of growth will come to an end in 2022. Beaulieu suggested companies looking at expansions may want to target the tail end of that year, as some competitors may suffer some cash flow issues as a result of the recession.
There is a widening trade imbalance with China. The tariffs imposed by the U.S. have been countered with retaliatory tariffs from China. Couple that with a strong dollar the Fed and Congress have little chance of deflating, and the already-large trade gap has increased.
The trade war will drag on for quite a while. “We can’t even agree with what to do with existing tariffs. We’re a long way from an agreement,” he said.
Your employment woes are going to continue. Companies in all sectors will need to be more competitive in wages and benefits to pull from a shrinking labor pool. In some states, firms will have to look to immigrants to fill positions, as negative net migration of U.S. citizens combines with the retirement tsunami to leave major gaps in the labor market.
There it is. An economic outlook for every mood.
But keep one other thing in mind: Whatever you do, just don’t ask him about the 2030s.