Annual Economic Forecast

Now that 2020 is, mercifully, behind us, it’s time to move onward and upward—that was the overall message from economist Alan Beaulieu, president of ITR Economics. Beaulieu presented his yearly forecast to ACG’s monthly breakfast on January 8.

Beaulieu’s 90-minute presentation gave an overview of the last year and what businesses should expect in the next 12 months and beyond.

For the most part, Beaulieu is bullish on the U.S. and local economies.

“Will we have another shutdown?” he asked. “I don’t think so.”

Beaulieu’s advice to business owners was simple: Now is the time to invest in your company if you have the money to do so – expand, innovate – whatever you can do. There is a second round of PPP coming and interest rates are at a low rate that should be enticing to everyone.

But what about the change in administrations in Washington taking place this month? Won’t that affect the economy’s trajectory?

“Statistically, there is no difference between what happens when the Republicans are in charge, or the Democrats,” he said. “The economy does its thing; the economy goes on.”

Beaulieu said that a rise in taxes is likely with the upcoming presidency of Joe Biden and the Democrat- controlled Congress.

“But you have lived through higher tax rates,” he said. “Now is the time to really spend your money on labor efficiency.”

Regionally the outlook is good, but business leaders have some work to do since the job market is and will continue to tighten and it’s going to be harder to attract talent. With Baby Boomers aging out of the job market, Millennials will have a stronghold on jobs, but don’t be quick to count out the small but mighty Gen X cohort, he said.

“Gen X will be the economic and political power in the late part of this decade,” he said. “But that power won’t last long. Millennials are coming. Millennials want change. If you are changing with them, there is a lot of opportunity.”

Beaulieu talked about what industries would have good years in 2021. He thinks that retail sales and housing will remain strong.

The hospitality industry, hit particularly hard by the pandemic, will come back eventually.

“It will be a slow turn,” he said. “People will take vacations again, but it will take awhile.”

Commercial real estate is an area that will similarly be slow to come back, thanks to the increase and overall success companies have found with work-from-home situations. Even companies that are bringing employees back to the office aren’t necessarily bringing everyone in at a pre-pandemic level.

“Work-from-home means companies need less space,” he said.