Prepare for slimmer times

“We will have a recession in the U.S. in 2009 and 2010 that will be similar to the one we had from 2000-2002,” said economy and business trend researcher and principal at the Institute for Trend Research Alan Beaulieu during his keynote address during the CSIA, or Control Systems Integrators Association, meeting in Santa Fe, N.M., Thursday. “That wasn’t much fun.”
Beaulieu discussed how to accurately project economic cycles and thereby prepare one’s business for the future.
Interest rates will rise this year by a half or three-quarters of a percent because of wage inflation, Beaulieu said. It is harder to find workers now, so one must pay more to get that hire one wants. Thus, there will be inflation, and thus, the Fed will raise the rates to banks.
Oil prices will rise this year, back to $70/barrel, he said. A democrat will win the election to the White House, and she (pause for laughter of agreement) will have a choice to balance the budget—cut costs, raise taxes, or increase deficit spending.
“Take a guess what will happen,” Beaulieu said. “We’ll continue and increase deficit spending, which means we’ll borrow more, issue more T-bills, they’ll be worth less because there are more of them, we’ll have to make them more attractive by increasing their yield … we will raise interest rates. Consumers have less to spend; we have recession.”
Recessions are cyclical and therefore make sense. We have a strong vibrant economy. Build your companies in this country, but go global. Prepare for the downturn by investing in and leveraging your products to enter non-cyclical, a-cyclical industries like health and elder care, medicals, pharmaceuticals, and higher education.
—Nicholas Sheble