By Kay Copilevitz
A nationally known economist is forecasting tough times ahead but says business leaders here can take control of their own future and profit regardless of what he sees as an “’80s-like recession.”
Economist Brian Beaulieu, the executive director of the Institute for Trend Research and chief economist for Vistage International, a worldwide organization for company presidents and CEOs, made his comments at the annual shareholders meeting of RockBridge Commercial Bank, a Sandy Springs bank that opened its doors in late 2006.
Beaulieu contends that “the pile-on” theory is in play. He foresees a recession in 2009 that gets worse in 2010 based on the “pile-on” effect of increasing natural gas prices, record crude oil and gasoline prices, a drop in home values coupled with declining home sales, the accelerating credit crunch, and the strong likelihood of tax increases after the November elections as the fundamentals creating the nation’s economic crunch.
“Most of 2009 is cast in granite as we speak,” he said.
Bank CEO Lauch McKinnon introduced Beaulieu as “a one-handed economist.” The economist said flatly that the metro area’s economy is going to get slightly better the next six months before it gets much worse, and he didn’t qualify his forecast by saying “but, on the other hand.”
“My profession has a lousy reputation,” the New Hampshire-based economist said, “and deservedly so.” He congratulated the business-focused bank on its early success and predicted that the number of more traditional banks in trouble “will be exceedingly large in 2009 and 2010.”
Beaulieu urged business leaders not to view the next two years “as doom and gloom, but rather an opportunity.” He said they have a responsibility not only to themselves, but also to employees and the community to stay profitable. “You will have some hard calls to make over the next 24 months.”
He told bank investors he believes that now is the time to stockpile cash to buy out weak competitors the next couple of years, to purchase materials at lower prices, and “to pare away your B players so you can focus on keeping your A team.”
“We’re about to hit an economic pothole in the business cycle, but it is one that you can profit through,” Beaulieu said. Focusing on counter-cyclical businesses, he said, may be one approach. He cited the energy industry, travel, the “green” movement, higher education, health care, leisure and pets as examples.
“Our government need not protect us,” Beaulieu said. “Just get out of our way. Count on yourselves and your people, the things you can control.”