If anyone at Alan Beaulieu’s presentations to HARDI members at its convention was hoping to hear that the election of a new president will goose the economy, they were likely disappointed.
And if they expected the chief economist for the Heating, Air-Conditioning and Refrigeration Distributors International to say that a Republican president — if he or she is backed by a GOP-controlled Congress — would be the best thing for the country or members’ businesses, then they don’t know the experts at ITR Economics very well.
“We’re apolitical. It does not matter to us,” Beaulieu, a principal at the New Hampshire-based firm said in an interview before the group’s Dec. 5-8, 2015, annual conference in Orlando, Florida. “As soon as you have that kind of bias, you start look looking at the numbers differently.”
That nonpartisan stance has helped ITR Economics achieve a 94.7 percent accuracy rate in more than 60 years of forecasting, according to the company’s website, www.itreconomics.com.
“We like to deal with facts,” Beaulieu said. “They’re pesky, those facts. But they do seem important.”
As the U.S. election cycle gets under way and politicians make promises, many people ask Beaulieu if a certain candidate or party will be able to change the nation’s economic path.
The answer is no, he said.
“The economy is bigger than Donald Trump — you can quote me on that,” he added.
And for now, that’s generally good news. Unemployment is down, the housing market is up and the overall country is doing well.
“The macro environment is moving as well had forecasted a year ago,” Beaulieu said. “Nothing is really very surprising. Oil (prices) is softer than we wanted it to be, but the industrial production trend, GDP (gross domestic product), all that is playing out just fine. The consumer is doing fine — as we thought he or she would.”
The U.S. Commerce Department’s Bureau of Economic Analysis said the country’s GDP increased at a 3.9 percent annual rate in the second quarter.
For HARDI members, it’s very good news, Beaulieu said.
“Consumers drive HARDI, and consumers are doing well,” he said. “The housing industry is doing well, remodeling is doing well. The government is not breathing down their throat. I’d say it’s a nice time to be HARDI.”
And if you’re worried about new regulations for the HVACR industry — a regular worry these days for many members — they usually have less of an impact on ITR’s forecasts than a person might expect, Beaulieu said. Consumers and industry usually have time to adjust.
“Generally speaking, it’s not nearly as big a deal as you might think it is because of the time factor,” Beaulieu said. “They often will phase them in, and because things are phased in, it makes it a lot easier for people like me to deal with. You can kind of see that coming.”
Politics don’t matter
And that holds true regardless of which party controls Congress or the White House, he added.
Beaulieu does see the economy losing some momentum in the next couple of years, but it shouldn’t cause worry.
“Things will soften some in the second half of 2017 and into ’18, but nothing real traumatic or dramatic,” he said.
Looking further out into the next decade, Beaulieu said the 2020s should be like most eras, with some good years and not-so-good ones.
“It will be like most decades — it will have its occasional soft spots or mild recessions, but generally speaking, you want to think of it as a ‘good’ decade,” he said. “There will be inflation, which will mask a lot of issues. And as it masks issues, people will finally go over the cliff.”
That’s a warning Beaulieu and other ITR economists have been giving for a while. At the 2014 HARDI conference, he previewed his book, Prosperity in an Age of Decline, which was published by Wiley. In it, Alan Beaulieu and his brother Brian preview the second Great Depression they predict will hit in about 15 years.
In a 2014 interview, Beaulieu acknowledged that projecting that far out requires a number of assumptions that could change, but it’s unlikely.
“The likelihood of having a president align with a Senate and with a House of Representatives all committed to doing the right thing on the national budget, for instance, is probably… the same likelihood of a comet hitting the planet,” he said.
And global demographic trends will not change, Beaulieu added.
“The baby boomers of the U.S. are the baby boomers around the world,” he said. And the social safety net and other entitlement programs needed to ensure their health and financial stability will likely become too much too bear.
“China is looking at 20 percent of its population in the next two decades being on government pensions. That’s a gulp even for China,” he said.
But for now, he said, enjoy the good times and consider taping into the easy-to-get credit markets for capital to expand your company.
“As long as you are doing it with competence, advertising and marketing,” he said. “If they’re just going to expand for the sake of (expanding), that’s not much of a plan.”
Among Beaulieu’s other tips: “Don’t forget to keep your eye on Europe. Everybody kind of looks at China, and on balance Europe is more important than China. Europe is larger than China.”