There is a time for everything.
For Brian Beaulieu, that time is now for business owners to take risks and enjoy the benefits — for sure until we are well into 2019.
“This is the time to invest in your business, the time to take risks,” Beaulieu told business leaders gathered at the Oshkosh Chamber Economic Outlook Breakfast in mid-February. “The only difference is that this year, I want you to stop taking on debt. The economy is going to get a bit soft in 2019. You will need to watch your debt leverage in 2019.”
As the CEO of ITR Economics and chief economist for TEC, a global organization for CEOs, Beaulieu’s prognostications have proven prescient in the past, as his month-over-month, quarter-over-quarter and year-over-year projections usually score close to the mark with an accuracy rating above 96 percent.
And despite February’s wild gyrations in the stock market, Beaulieu sees strong fundamentals for the economy going forward, projecting a strong first half of 2018 before economic growth begins to slow in the latter half. Beaulieu also projects those difficulties will lead the economy into 2019, before growth begins to recover heading into 2020.
While Wisconsin and the region tend to trail the national economy when it comes to the upswings, the drops also tend to be less severe, he says, adding that indicators suggest regional business leaders should follow the same suggestions.
“The United States is still the world’s largest economy and will likely remain so for at least the next 100 years,” Beaulieu says. “While some of the indicators are slowing, there is nothing that is going on that is deflationary.”
What business owners should be watching out for, though, is interest rates. While recent tax reforms are welcome news, they were also accompanied by spending increases, a combination that will begin to drive up interest rates.
For the region’s manufacturers, there are a couple of additional indicators to watch for: The dollar should remain weak for the next two quarters, helping exports; and labor woes will continue, making this the time to look to automation and robotics.
“This is the time to train the people you have so you can keep them, then bring on the robots to do the rest,” Beaulieu says.
Economic forecasts from events recently held up and down the region echo Beaulieu’s optimism.
Elliot Eisenberg, “The Bowtie Economist,” who spoke at the Fox Cities Chamber’s Economic Outlook Lunch, notes a rare global event is making 2018 a year of optimism. That rarity is synchronous growth.
“The economies of the world’s democracies were all growing at the same time in 2017,” Eisenberg says. “That last happened in 2004-07. It’s anticipated to continue in 2018. It’s as good as it gets and as good as it will be for a while.”
Like Beaulieu, Eisenberg sees interest rates as the indicator to watch as the economy moves into 2019 and 2020. He’s also not sure the economy can continue to grow at 3 percent or more going forward, largely because there are not enough people to fill the jobs, and productivity is stagnant.
“We need more people to work and more productivity,” he says. “Neither is happening.”
Local data collected by the Fox Cities Chamber of Commerce indicates regional businesses are still bullish about the economic conditions, though there is trepidation about being able to continue the pace. In an annual survey of chamber members, most indicated record years for sales and profits in 2017 — nearly 80 percent reported meeting or exceeding 2016 numbers — with slightly less optimism for 2018.
“I think 2017 was so good, they are not sure if they can beat that again,” says Peter Thillman, vice president of economic development for the Fox Cities Regional Partnership, which conducted the study. “It may not be scientific, but it gives us a pretty good idea what is going on.”