Alan Beaulieu issued a simple warning at last week’s joint NIBA/PTDA Industry Summit in Hollywood, FL, that should have all distributors preparing now for what’s on the horizon. “It’s been a good year, but there is a change coming,” he said. “Things are going to slow down.”
That change won’t happen until the first quarter of 2018, so here are some noteworthy trends that should benefit U.S. businesses: Consumer spending is up, interest rates remain favorable, banks are lending, employment and even wages are rising, and exports are 3.2 percent ahead of last year and still improving.
The mood at the Industry Summit was upbeat, with one power transmission distributor claiming that “if you can’t make money in this environment, something’s wrong with you.” Recent headlines support this positive climate:
- Manufacturing Sector Expands in September
- Real GDP Up 3.1% in 2Q According to Third Estimate
- Durable Goods New Orders Up 1.7% in August
- ISA Economic Indicators Increase for Distributors, Manufacturers
- U.S. Housing Starts Up 5.7% in August
Beaulieu – a self-proclaimed “political agnostic” – was quick to point out that these favorable conditions are the result of a natural cycle and not because of who was elected president last November.
“The Trump bounce is media nonsense,” he said. “(The economy) was heading up before the election,” and if Trump’s opponent had won in November, Beaulieu suspects we’d be hearing about the Hillary hike or some other phrase to falsely attribute growth to the White House. At the same time, the recession Beaulieu expects next year is one that he’s been forecasting for a long time, as well.
Simply put, the economic climate has been modestly improving and will continue to do so until February. But when the U.S. industrial production index peaks in the second month of 2018, for look for things to taper off the rest of the year before turning more sharply downward in 2019.
Beaulieu advised company executives to use whatever slowdown is coming to invest in your business, from equipment to ERP systems, from talent to technology.
“Leadership is becoming more critical,” Beaulieu said. “Forget the noise. Lead your company with confidence. Don’t hunker down in the slowdown because that’s when it’s time to be aggressive.”
For much more on how to handle the coming slowdown, check out the series we published in 2016 on remodeling your distribution business.