Alan Beaulieu’s Crystal Ball: Heed Baked-In Economic Trends

The president of ITR Economics peered into the future and shared his forecast at Chief Executive's Leadership Summit.

The economy will decelerate, but glide along pretty well for a few years. A recession is coming in 2026, followed by a recovery—and then a global depression. That’s what Alan Beaulieu’s crystal ball says, and his ITR Economics firm has been consistently right in predicting trends for decades.

Everything is baked in already, Beaulieu said, but here are some things you can do to zig and zag in the right ways and at the right times.

• Bet on better logistics.

The supply-chain debacle of 2021 “will get fixed as we move through 2022,” though the microchip shortage will keep many manufacturers on edge until the second half.

• Don’t worry about politics.

Economic growth is little affected by which party rules Washington, he insisted. Even the prospective higher taxes that have been on the table under the current Democratic regime “won’t change our forecast.”

• Play inflation correctly.

Despite the fall report of inflation at a 39-year high, it “will calm down now” and “begin to dissipate, but not down to 2019 levels.” Then inflation will pick up again over the next several years, he said, to 6 percent to 8 percent by the end of the decade. The unprecedented government-spending boom will guarantee rising interest rates too. “You can manage just fine if you’re ready. Raise prices as often as you can,” relying on “competitive advantage” rather than citing cost recovery.

• Save cash.

Stockpile it now “for when rates are high and you want to buy something. Right now, think about acquisitions, improving labor efficiency if you’re a service business, spend on CRM and other processes. Then pay it off by the end of the decade.”

• Wait to sell your company.

The torrid M&A activity of 2021 will slow down into 2022, he said, so “you may want to wait to sell your company until 2025, maybe 2024.” 

And don’t include an earn-out: “You’ll get less cash up front, but that’s OK, because you’re not going to be able to earn it in an earn-out anyway.” The next good time to sell won’t be until near the end of the decade.

• Lean into America.

The rising cost of Chinese manufacturing labor and general supply-chain resilience favor American manufacturing. “U.S.-centric firms will have more opportunities going into the future.”

• Automate like heck.

Even the surge in immigration won’t fill all the jobs that still go begging in America. “We’re in a bidding war for talent that will go on a long time,” he said. So, do all the automation you can.”

• Brace for 2030.

The depression will be “caused by aging demographics around the world” and interest payments on unprecedented government debt. “It will be a lost decade,” Beaulieu said. “It will be a painful decade.”