The U.S. economy is slowing, with third-quarter GDP at 2% and exports in decline, economist Alan Beaulieu told Specialty Tools and Fasteners Distributors Association members gathered in Nashville.

Tariffs imposed by the U.S. on various counties are “definitely painful,” he stated. “This has had a negative effect on some companies, and a positive effect on others.”

Beaulieu doesn’t think the U.S. and China are close to a trade deal that would reduce or eliminate tariffs. The two countries “can’t even agree on a ‘little’ moonwalk of walking back tariffs in Phase 1 deal,” he stated.

GDP is projected to go negative in the first quarter of 2020, he explained.

“It’s just one quarter. I don’t want you to think there will be a recession. There will be growth in 2020.”

Beaulieu said the average rate of U.S. growth is virtually the same under both parties.

“Whether there’s a Democrat or Republican in the White House does not matter.”

To help your company succeed, it’s important to think a half business cycle ahead, he advised.

“Ask: What do you need to be more successful and profitable in the future, then spend the money to get what you need.”

In 2022, the U.S. will see “the steepest recession since the Great Recession,” Beaulieu predicted.

The largest changes in the 2020s will be political and cultural.

“If we say we don’t like immigrants, then we have a problem,” because otherwise our labor pool is shrinking, he noted.

Companies that prepare for recessions pull ahead during and after them.

Modern monetary theory says that national debt doesn’t matter; you can spend as much as you want, Beaulieu pointed out. The thinking is to “just keep borrowing and printing money.”

“It has never worked in history. It’s been tried but it always failed.”

He noted that both parties do this.

A major problem with the U.S. economy is health care costs, he explained.

“We baby boomers are sucking the life out the economy through the health care system because it’s so expensive.”

It’s a problem that’s not going away. Pharmaceutical costs are also rising.

“The tax cut gave the economy a short 5-month boost. But that’s it.”

Millennials in the next decade are going to make a lot of money as 10,000 boomers retire every day and there are not enough Gen Xers to fill the jobs, Beaulieu predicted.

“Boomers have been the dominant force in politics for decades, but we’re going to slowly lose our group and we lose our grip.”

Beaulieu encouraged businesses to embrace these changes. 

“Aim your website at them, talk about development, discuss company culture,” he advised. And the interview is not an interview, it’s a conversation.

“It’s easier to hire if you change to be like them instead of expecting them to change like you.”

Nearly nine in 10 millennials are thinking about their next job on the first day they start working for you.

“Millennials are going to power this nation forward. They are going to change the country.” Web: STAFDA.org

Dr. Alan Beaulieu is president and a principal of ITR Economics. Web: ITReconomics.com