Economist: Manufacturing gray skies are gonna clear up

Economist Alan Beaulieu said that the manufacturing industry will continue to grow throughout 2016 at the MFG Conference in Palm Desert, Calif.
By Bob Vavra, Content Manager, CFE Media March 4, 2016

Economist Alan Beaulieu addresses the MFG Meeting in Palm Desert, Calif., putting forth a positive economic picture in the near term. Image courtesy: CFE MediaThe annual MFG Conference, sponsored by the Association for Manufacturing Technology (AMT) was held this year in Palm Desert, Calif., which was the perfect setting for a warm and sunny economic forecast from economist Alan Beaulieu, president of ITR Economics. Beaulieu, a regular speaker on the economic pressures facing manufacturing, told more than 200 manufacturing executives that growth in manufacturing will accelerate throughout the rest of 2016 as oil prices stabilize.

"In 2017, we’re looking at even a better year," said Beaulieu. "We’re about out of the woods, and we’re going to see a nice uptick in activity. If that’s all you wanted to hear, we’re done early."

Beaulieu said that problems facing the mining and oil and gas sectors will dissipate due mostly to political pressures. Noting that Saudi Arabia is now dipping into its money to cover the low cost of oil and gas, Beaulieu said, "Saudi Arabia is talking about capping production level. You’re going to see prices go up. If you are in business in oil and gas, you’re going to begin to see improvement by June. Prices will go well above $45 in 2017."

Leaving that sector aside, Beaulieu was bullish on manufacturing. "Manufacturing is slowing down, not breaking down," he said. "We are not looking at a recession in manufacturing in the United States. Life is going to be good for you, and it’s going to be better. Most of America doesn’t know that. We are fundamentally poised for a good economic run."

Economic growth rates are cruising along at an appropriate pace, Beaulieu said. "We’re going to pop at 4.5% (GDP growth) from time to time, but we’re going to cruise at 2.5 to 3%," he said. "There are no four simple things that will make the economy grow to 4.5%, and I’ve heard people from both political parties say that."

While Beaulieu avoided specific political references in his address, he had no problem poking at some of the political stances in the current presidential discourse.

"We don’t make anything in America any more? Are you kidding me?" Beaulieu said. "One company leaves and goes to Ireland, and everybody talks about it. You don’t hear about four companies coming to U.S. The flow of business to U.S. is truly amazing. One reason is that we’re well on the way to energy independence."

On that point, Beaulieu noted that the United States now produces 93% of the energy it consumes. "This is the dream of Richard Nixon. We know. We have it on tape," Beaulieu said, to some laughter. "The reality is, this is one of those big light bulb moments. This is one of the reasons why businesses are leaving China to come here, why they are leaving Germany to come here."

He also suggested that economies in other parts of the world, specifically Russia, China and South America, are struggling both economically and politically, which further strengthens the U.S. economy.

Bob Vavra is content manager, Plant Engineering, CFE Media, bvavra@cfemedia.com.

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