Consistent with the positive trends in the overall U.S. economy, this year (like 2016 and 2017) is shaping up to be an excellent one for PFC and our customers across all industrial sectors. But, as the late economist Herbert Stein wisely observed, when it comes to global economic trends “If something cannot go on forever, it will stop.”
When it comes to gaining an understanding of economic trends and what we might do in response to them, we at PFC — like many of our fellow Vistage members — look first to ITR Economics, a small but global economic forecasting and consulting firm in Manchester, NH. We look to – and trust – them for one simple reason: for the 20+ years that we have been a client, their forecasts have been far more accurate than any others we know of. That accuracy, in part, may be a “no-nonsense New Hampshire thing;” they focus on the numbers while being notably disinterested in the political implications of those numbers or what might be trendy in the mainstream business press.
Getting back to Herb Stein’s observation… while 2018 is shaping up to be an excellent year for business, it can’t and won’t go on forever. ITR’s CEO Brian Beaulieu and his staff already see clear signs in the U.S. industrial sector that “portend slowing growth in the latter half of 2018 turning into mild contraction for 2019.”
In response, ITR suggests that businesses build up their cash reserves now – “to mitigate the difficulties” they will face in 2019, and, to “invest for the accelerating growth trend expected in 2020.” In addition, as the economy turns downward, ITR recommends that firms consider “offering more price-sensitive products to appeal to cash-strapped firms” and that they market how their company’s products and services can help their customers reduce their costs.