5/11/2009
HEADLINES
Beaulieu at NFDA: Think Ahead Half a Cycle

“This downturn is the worst in your business career,” economist Brian Beaulieu declared at the National Fastener Distributors Association spring conference. “But it doesn’t last forever,” he added.

“There is no hope for the next two or three quarters,” Beaulieu acknowledged, but then advised NFDA members to “buy forward” for a better economy in 2010. “Lock in lower prices” because in 2010 commodity prices will rise.

“Think half a business cycle ahead,” Beaulieu counseled. “Borrow as much as you can in 2009 and 2010,” while interest rates are the lowest in 35 years. “Cash at the bottom of a business cycle you rule the next cycle,”

Beaulieu, of the Institute for Trend Research, predicted 2012 will be “the next window of opportunity to sell your business.”

“Fasteners are not down as much” as other segments of U.S. industrial production, Beaulieu noted.

Texas is still doing comparatively well because of the oil industry. New Mexico and the Carolinas also are doing well and the Pacific Northwest and Minnesota are above national averages.

Some regions are in more difficult economic situations than others. The state of Ohio is in a “very difficult situation” that “isn’t likely to improve soon,” Beaulieu said in suggesting a “group hug for those from Ohio.”

• “Buy wealth creating assets. Real estate on the water or in the mountains is prime because of the limited supply.

• Unemployment is going to continue to rise through 2009.

• Make necessary layoffs soon and all at once, Beaulieu advised. “Cutting once is better. Make that tough call.”

Beaulieu suggested retiring by 2029 because U.S. government debt levels will drive up taxes.

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