Prepare For Second Half Slowdown, Mild 2019 Recession, Says ITR’s Alan Beaulieu

Since the release of Prosperity in an Age of Decline in 2014, Dr. Alan Beaulieu, president of ITR Economics, has said on our podcast many times that a US recession was unlikely until around the 2019 timeframe and that economic growth, including inflation, would accelerate before the business cycle ended.

FS Insider spoke with Alan again to discuss ITR’s outlook for the year into next. Here’s a clip of what he had to say from our 20-minute conversation:

Prepare for Mild Slowdown in 2019

Beaulieu has consistently called for growth since the end of the last recession, citing ITR’s proprietary leading indicator and other metrics as evidence, and now he’s emphasizing that we should expect to see the U.S. economy see a slowdown beginning in the second half of this year, and a mild recession developing in 2019.

See ECRI Forecasting Global Economic Slowdown for 2018

“The danger here is the people who are enjoying the first half of 2018 will have a natural, very-human tendency to straight-line forecast and say the second half will be like the first half,” Beaulieu said. “And that is when we run into problems.”

Industrial production is slated to be softer in 2019, and both the U.S. and other countries will put out a slight negative number.

Consequently, he recommends that companies prepare now for the slower rate of growth and what will amount to a very minor downturn in industrial production.

“GDP’s only going to go flat in 2019, but industrial production will see that mild recession we’ve talked about,” he said. “The danger, again, is an unwillingness to see around the corner, and thus put your company out of position. We like to think of it in terms of swimming against the tide or upstream. You can do it, but it takes more work.”

How Will Fed Rate Increases Hit the Economy?

We’re seeing inflationary pressures build up now, at least some of which is due to wage inflation.