Dr. Bill Conerly is an economist and consultant who made a presentation at the recent FPDA/ISD Summit. The title of his talk was Economic Rainbow: What the Recovery Means for Industrial Distribution. Here are some points of summary from his presentation.
One key macroeconomic perspective given is that the period of time in U.S. history from 1983 to 2007 is a period of relative calm and stability. The swings in the GDP and the overall economy were mild both in the upward and downward directions. This made forecasting and planning a little easier for companies. The period of time since 2007 is much more volatile and will probably remain that way for a while.
Dr. Conerly is projecting that the recovery will continue and that we are probably facing at least four years of slow growth. This falls in line with some of the forecasts made at this year's NFPA Economic Outlook Conference in August. He does, however, predict that volatility is the likely state of the economy during this time. He is not predicting a double-dip recession but he is not completely ruling it out either.
The housing market is holding our recovery in check. This is simply because there are more units available than are needed. This is not likely to get better any time soon.
Retail sales of course plumetted in 2009 and this is directly tied to unemployment and consumer confidence. A "normal" recovery would need quicker re-employment to drive this sector of the economy.
The GDP is forecast to improve by about 3% annually for the next few years. However, it will continue to lag behind the potential GDP growth which is based on labor and equipment capacity. This is a cause for concern for long-term growth.
Other key factors driving the slow recovery are very low interest rates, deep governmental budget deficit, slowly increased manufacturing production, and slow recovery to inventories.
If Dr. Conerly's forecast comes true, and it looks like it will, that is not totally bad for the industrial economy of the United States. A period of growth, no matter how small, enables companies to plan for the near-term future with a lot more confidence than we had in the past few years.