chris kuehl, economic analyst, fabricators & manufacturers association, and managing director,...

WI International Trade Conference – 05.12.09

Surviving the Recession of 08-09It WILL End but the Recovery Will Present Its Own Challenges

Chris KuehlEconomic Analyst

Fabricators and Manufacturers AssociationManaging Director

Armada Corporate Intelligence

http://www.mmac.org/display/router.asp?docid=1



The Recession of 2008-2009 is OVER!!

• Stock market has gained 30% since March• CMI has been up for three straight months• PMI has started to trend upward (but is still under 50)• Banks have survived the “stress tests” and Libor rates are

back down to traditional levels• France and Italy have seen indicators trend back up – so has

the UK• China is back in growth mode and so is India• Investors pouring more money into emerging markets than

anytime in past twenty years




OK – So It’s Not Exactly Time to Pop the Corks

• Unemployment has moved above 9%• Industrial production is roughly 40% below where it was

last year• GDP growth is anemic and still negative in some nations• Credit markets have improved but are still cautious• Deficit spending is pushing many nations to the brink and

many will have a hard time reducing it• Inflation is the next big challenge and it will require moves

that will slow recovery




How Bad Was This Last Recession?

• Comparable to recessions in the last three decades – not necessarily the worst but some unique issues

• Fundamentally a bank led crisis and one that will not end without a bank recovery

• Worst quarters were in 2008 Q4 and 2009 Q1 – more hope for Q3 and Q4

• Factors that play into global recovery – consumer attitude, banks, foreign trade, stimulus plans and the threat of inflation

• Asia as a major force for recovery




Stimulus - China vs. US

• $780 billion vs. $600 billion• US version – divided into three unconnected plans –

stimulus, recession relief and tax modification• Chinese version – highly targeted on job building and

economic growth• US version – slow to evolve – highly regulated environment• Chinese version – very quick to implement – little concern

for details – just get something going to create jobs• No more than 3% allocated thus for infrastructure in US as

opposed to 60% in China




Banks, Capital Markets and Bail Outs

• Some movement in the capital markets – Libor is close to normal again, most seem to have survived the “stress test”

• Desire to nationalize has faded but intervention is significant – regional banks fared better than most but FDIC worries them

• Why the banks got in such trouble – equal measures greed and stupidity and the law of unintended consequences

• What happens with the automotive sector – Fiat comes back to US, GM shrinks, Ford gloats and the new auto sector is in the south and has Asian roots




Five Things to Keep You Awake at Night

• Global recession affecting Europe and Asia differently

• Interest rate policy – when do they go back up?

• The return of the oil and commodities bubbles

• The recession expanding beyond this year

• The recession ending soon while providing something else to worry about - inflation




Coming Out of a Recession

• The first few months of a recovery are often the most threatening in the whole recessionary period.– Competition is prepared to exploit any weaknesses.– Ammunition to respond to these threats is in short supply –

especially this time given the problems with finance.– Consumers are highly demanding if they have money to spend –

other consumers are moribund– Precise knowledge of the recovery period is not available – how fast

and how soon are the major questions.– Policy shifts by the government can provide help or it can deal a

death blow – depending on who the policies are designed to assist




Contact Information – [email protected]

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chris kuehl, economic analyst, fabricators & manufacturers association, and managing director,...

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