This is the time of year that we are bombarded with one 2016 economic forecast after another, so for some of us business writers, it’s good fun. Last year I wrote a post about my reflections on comments by economist Alan Beaulieu, someone I’ve followed for several years. Although I was unable to attend his annual talk in Denver this year, the Denver Post covered him at the Association For Corporate Growth January meeting.
According to reporter Aldo Svaldi, Beaulieu has not changed his tune. The U.S. economy has hit a slow patch – predicted by Beaulieu last year — because of a strong dollar hampering manufacturing, but will motor on nicely in 2016, with steady, widespread growth driven by consumer spending. It’s a time for businesses to expand and enjoy great success. The biggest challenge is to find and retain quality employees.
A BUSINESS PERSON’S TAKE ON BEAULIEU’S 2016 ECONOMIC FORECAST
“He said that it will be better for everyone in 2016. 2015 was a little relaxed,” said Kathleen Quinn Votaw, CEO of TalenTrust, a Denver recruiting firm that serves clients nationwide. “2019 will be a recession, but more for consumer-based companies. B2B firms will be less severe.”
Near full employment benefits Votaw’s firm. The author of a soon to be published book, “Solve the People Puzzle,” she spends time showing businesses how to work with contractors or part-timers.
“Companies are struggling to attract people to do all manner of work. It’s a problem up and down the organization chart,” Votaw said. “Baby Boomers, people in their 60s and 70s, are going into another phase of work. They want to work but on their terms. They want to work 20 or 10 hours a week. They don’t want 60- or 70-hour weeks anymore. Right now we don’t have the numbers to replace all those people who are cutting back.”
The rest of economist Beaulieu’s narrative remains true to the one outlined in my blog post from last year. We’ll have three years of smooth roads followed by a yawner of a recession in 2019, and it will begin showing up in late 2018. The recession will be followed by a decade of economic bliss.
Unfortunately, all that fun will be fueled by easy money policies of a U.S. government that can’t bite the bullet on spending. The massive overhang of debt will body slam the economy in 2030. Beaulieu cynically quipped last year, “Who cares, we won’t be around anyway.” I argue that we’re robbing from our kids’ futures with the deficit spending.
HOW ‘THE BIG SHORT’ MOVIE PLAYS A ROLE IN 2016 ECONOMIC FORECASTS
I’m not alone. Susan and I recently viewed “The Big Short,” Michael Lewis’ book on the 2008 financial crisis made into a movie starring Christian Bale and Brad Pitt. We loved the movie, and also this article on Michael Burry, the genius Scion Asset Management fund manager who predicted and profited on the financial collapse that had roots in fraudulent home loans.
Burry’s interview with New York Magazine is incredible. Every sentence he utters would be worth its own article. He is particularly critical of those who are addicted to debt, including the Federal Reserve and the U.S. government, and how that will bring us future pain:
“Debt. The idea that growth will remedy our debts is so addictive for politicians, but the citizens end up paying the price. The public sector has really stepped up as a consumer of debt. The Federal Reserve’s balance sheet is leveraged 77:1. Like I said, the absurdity, it just befuddles me.”
It’s a mind-blowing interview, worth taking the time to read. We talk a lot on this blog about thought leadership. Michael Burry is a true thought leader. Being a fund manager makes him on the buy side, so he speaks without self-interest. So as we enjoy all the coming economic good times, we should also be aware of what is fueling them.