Jeffrey Dietrich, Ph.D., a senior analyst with New Hampshire’s Institute for Trends Research, told HARDI members that the economy will slowly get better in the coming months.


HOUSTON - While the U.S. economy and much of the construction business is still trying to regain its footing, many HARDI members are pleased where they stand.

That doesn’t mean business couldn’t be better, but compared with other sectors of the industry, many of the companies that make up the Heating, Airconditioning and Refrigeration Distributors International say they are happy with where they stand - especially in this market.

Members came to the Oct. 23-26, 2010, event in the sprawling city of Houston to hear about ways they can keep growing and profiting, as well as experts’ best guesses as to where the industry, economy, government regulations and steel prices are heading.

And perhaps the most popular soothsayer among the many people HARDI brought in to give their opinions was Jeffrey Dietrich, Ph.D. The senior analyst with New Hampshire’s Institute for Trends Research gave attendees a lesson in “Reading the Economic Tea Leaves” at an Oct. 26 luncheon.

HARDI’s Oct. 25 trade show was busy.

A state of confusion

Dietrich admitted the experts at the institute are confounded by the current environment.

“This economy is very confusing,” Dietrich said. “We’re very uncertain about what the future holds.”

They are confident the long-running recession is over, although he acknowledged that few people are feeling positive about their financial situation. Many businesses are reluctant to spend.

“There’s an awful lot of money sitting on the sidelines,” Dietrich said.

But the institute is forecasting growth for the next three years.

“It’s going to be mild, but steady, growth,” he said.

To demonstrate that even this downturn is cyclical, Dietrich put up a copy of a Time magazine story from September 1992 on the screen behind him. Reading from the story, it sounded as if it could have been written today.

Things will get better, he said.

“One of the ‘good’ things about this recession … if you are in business and are profitable” you are in a good position to fare well in the future, he added.

But the country’s housing market will continue to struggle.

“Some think in a couple years we’ll be building a million homes a year,” Dietrich said. “We’re not quite that optimistic.”

But a so-called double-dip recession is now unlikely and banks are starting to lend again.

“It’s going to be a little easier for your consumers to get credit,” he told the wholesalers in the audience.

Unfortunately, the job market is likely to stay soft for several years, Dietrich said, adding that unemployment is “going to remain high.”

“I hope you are not making your strategic decisions based on employment,” he said, because it is a lagging indicator that is one of the last to bounce back after the economy improves.

Slower growth is not always bad, he said. It beats an overheated market. As for other economic indicators, the institute is predicting that oil will slowly and steadily increase in price as the world’s economy comes back. Copper prices will remain at or near record highs.

“There’s going to be bumps and bruises” during this recovery, Dietrich said.

Jonathan Melchi, HARDI’s manager of government affairs, told members of the HARDI Government Relations Committee that it was likely that the U.S. House of Representatives would switch to Republican control in 2011. And a few weeks later, Melchi’s prediction turned out to be accurate.

Political prognostications

Also offering his insights was Jonathan Melchi, HARDI’s new manager of government affairs. During the Oct. 24 Government Relations Committee meeting, Melchi gave members his insights as to what the then-upcoming November elections would bring.

He said locally and nationally, Democrats are facing a lot of voter anger.

“It’s simply a nasty environment out there (for them),” he said.

Melchi predicted Democrats would lose control of the U.S. House - something that did indeed happen just a few days later.

“If the Democrats lose the House, they will be inclined to jam through just about anything they can while they still have the power,” he said.

In the so-called lame duck session that would take place in December 2010, Melchi said the tax cuts enacted under former President George W. Bush would be extended as well as the estate tax exemptions.

Both predictions turned out to be correct.

But if anybody in the audience was hoping the recently enacted overhaul of the U.S. health insurance system would be killed by a new Republican-controlled Congress, Melchi had some bad news.

“Folks, health care is not going to go away,” he said. “It’s not going to happen.”

Melchi added that it was possible some small parts might be changed, such as the provision that allows people up to age 26 to stay on their parents’ health insurance plans whether they are in school or employed.

This year’s HARDI conference is scheduled for Oct. 22-26 in Wailea, Hawaii, which is on the island of Maui.

For reprints of this article, contact Jill DeVries at (248) 244-1726 or e-mail devriesj@bnpmedia.com.