11 Takeaways – 2021 ITR Session with Allied Executives

In many ways, we are in unprecedented economic times.  In other ways, there are multiple historic examples – precedence – we can lean on.  Knowledge is truly power as we work to navigate these dynamics and continue to stay competitively advantaged and grow healthy businesses.

Below are several summary points shared by ITR Economics’ CEO Brian Beaulieu at our recent Allied Executives Business and Economic Update Session.

Given the serious depth, explanation, and implications Brian provided behind each of these key points, do give the session a watch or visit their site for me webinars and access.

As always, stop to question and think through the key points in this session for their meaning to you and your business!

The labor shortage is not going away. 
The pinch with finding and keep capable talent is here to stay.  For the next decade we will be fighting a labor shortage.  Creative and consistent strategizing what to do about it is where to spend your time.  Do what you can to automate away from people and improve your culture – clear career pathing, heeding to work/life balance, etc.  

Supply-chain challenges will ease…
… more demonstrably in 2022, but in many cases not until 2023.  How’d this all happen?  In a simple sense, our government overstimulated demand while at the same time locking down the supply chain.  Suppliers have great incentive to get caught up – it’s called profit – but it will take time and not until we’re through Covid. 

Time to raise prices…
When demand outstrips supply, you pull this lever (as many have).  However, don’t solely do it on your own supplier increases.  The supply chain is the why, but not the story.  Do it with your foreknowledge of the market and on the strength of your competitive advantages to retain margin down the road.

Continued US GDP growth through 2025.
If you think your busy now, where are you going to find the energy, working capital, talent, and supply to compete for the next 3-4 years?  Be planning for this extended run.

An anticipated recession comes in 2026.
Post-Covid, this looks like it could be a nasty, financially driven downturn due to the imbalances in the economy.  2027, back to rising.  The takeaway? If you are thinking about retiring or selling your business, do it in 2025.  Why put yourself through another recession?  Avoid an earnout if you can.  If you can, be a buyer in 2026.

How come interest rates are still low?  Even with all the stimulus out there? 
Because the bond market and the federal reserve believe the bout with prices that we are experiencing now is transient and that it will return to normal.  We tend to agree.  The rates will go up in the future, but not immediately.   Leverage this situation - make acquisitions, invest in your processes, marketing, and training.

As the bond market goes, so does the Fed
The Fed takes its cues from the bond market.  The bond market typically looks out about 18 months and is right about 90% of the time. 

A Trend Towards Nationalization vs. Globalization is emerging…
Plenty of factors – declining population growth in many large economic powers, tightening borders due to the pandemic, supply-chain pressures and more are all contributing to a more inward look at how we can rely more on ourselves for sustainability.   No need to look over our shoulders at China.

Decelerating Growth in 2022
Every leading indicator indicates, at this point, slower rise in 2022, and into 2023.   Adjust your budgets accordingly.  We’ll still grow, but not the same percentage increase.

The housing market…
…will continue to grow through 2023 and likely 2024.  There’s no question the housing market is an asset-price bubble.  However, with the low interest rates, current money supply, and available credit in place that bubble isn’t popping anytime soon.  Further, Millennials are buying homes like we never thought they would – and in places we never thought they would. Don’t wait to buy that home because you think the price is coming down soon.  It’s not.

The financial markets are overvalued and overpriced.
Proceed with caution and understanding.  The more you know…