riding the crest into 2020 - finneytown school district · forecasts tailored to client’s needs....

First in Forecasts Since 1948

Brian BeaulieuCEO

Riding the Crest into 2020


ITR Economics provides the best economic intelligence to reducerisk and drive practical and profitable business decisions.

2018 Forecast ResultsIf you heard ITR around two years prior… 2

Duration Accuracy

US GDP 24 99.9%

US Ind. Production 34 99.4%

Europe Ind. Production 24 99.2%

Canada Ind. Production 27 97.1%

China Ind. Production 30 99.9%

Retail Sales 28 99.6%

Housing (Single Family Units) 26 99.2%

Employment (Private Sector) 30 99.4%


12-Month Moving Average 12/12 Rate-of-ChangeYear-over-Year Growth Rate

• Annual Trend: • Phase: • Year-over-Year:

2019:

2020:

2021:

ITROutlook

Slowing Growth for 2019US Industrial Production Index

US Industrial Production Index

109.2C

3.9%

0.5%

0.7%

2.0%

Source: FRB

84

89

94

99

104

109

114

84

89

94

99

104

109

114

-15

-10

-5

0

5

10

-15

-10

-5

0

5

10

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22


Ohio Grows When the US RisesUS and Ohio Gross Domestic Product Growth Rate

-8

-6

-4

-2

0

2

4

6

'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20U.S. Ohio

Source: BEA3/12 Rates-of-Change

4


Cincinnati and Ohio LinkageOhio to Cincinnati MSA Gross Domestic Product

500

515

530

545

560

575

590

605

8.4

8.6

8.8

9

9.2

9.4

9.6

9.8

10

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19

OhioCincinnati

Cincinnati MSA

Ohio

Source: BEA3MMA Data Trends in Billions of Chained 2009 Dollars

5


Manufacturing: A Growing Part of AmericaUS Industrial Production Index to US Total Manufacturing Production Index

106.4109.4

30

45

60

75

90

105

120

30

45

60

75

90

105

120

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025

ManufacturingUS IP

US IP

Manufacturing

Source: FRBAnnual Data Trends

6


Manage the Business Cycles to Maximize ProfitsUS Industrial Production to Gross Domestic Product

-6.9%

-2.9%-5.2%

-15.5%

3.2%

-16

-12

-8

-4

0

4

8

12

-16

-12

-8

-4

0

4

8

12

'82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 '24

GDPUS IP

GDP

US IP

Sources: FRB, BEAYear-over-Year, Quarter-to-Quarter (3/12)

7


Lower Taxes Likely to Provide a Temporary BoostUS Top Marginal Individual Tax Rates to Real GDP Growth Rate

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

-4%

-2%

0%

2%

4%

6%

8%

10%

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

Real GDP Growth Rate - 3/12 Top Marginal Tax Rate

Sources: Tax Foundation, BEA Tax Rate - Percent, GDP - 3/12

Rea

l GD

P G

row

th R

ate To

p M

argin

al Tax Rate


Not All Freed Up Money Went to CapexUS Corporate Tax Rate and Gross Business Investment

0%

10%

20%

30%

40%

50%

60%

70%

0%

10%

20%

30%

40%

50%

60%

70%

'60 '64 '68 '72 '76 '80 '84 '88 '92 '96 '00 '04 '08 '12 '16

Corporate Tax Rate %

Gross Business Investment (% of GDP)

Linear (Gross Business Investment (% of GDP))

Sources: Tax Policy Center, FREDPercent

9

Atlanta Federal Reserve Survey W.S. SurveyHard Data


Global Issues• Business Cycle• Tariffs


Trade Stress Becomes Acute on the Downside of the CycleWorld Industrial Production Index to G7 Leading Indicator

-6

-4

-2

0

2

4

6

-15

-10

-5

0

5

10

15

'92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22

World IP

Indicator

IndicatorWorld IP

1/1212/12

Sources: CPB Netherlands Bureau For Economic Policy Analysis, OECDRates-of-Change

Fair Trade

Competition


Brands That Have or Will Be Increasing Prices Due to Tariffs

Source: Business Insider, “These popular brands say Trump's tariffs will force them to raise prices”

TOYOTAWHIRLPOOLCOCA-COLAWINNEBAGOMILLER COORSSAMUEL ADAMSCAMPBELL SOUPLG ELECTRONICSGENERAL MOTORSKLEENEX & HUGGIESPOLARIS INDUSTRIESNEWELL BRANDS (Crock-pot, Rubbermaid, Yankee Candle, & Sharpie)

“I can't just go to the shareholders and say, 'You're just going to have to accept my profit's going to be $40 million less. It doesn't work that way…”

- Gavin Hattersley, CEO MillerCoors


Financial Markets

Back to the USA


10

100

1000

10000

10

100

1000

10000

1980 1985 1990 1995 2000 2005 2010 2015 2020 2025

Raw

12MMA

Perilous Height Is Not the Issue S&P500 Stock Prices Index

Source: Wall Street JournalData Trends

14


CAPE RatioJanuary 1900 – April 2019

Analysis prepared by : Baird Family Wealth Group April 2019Source: Robert Shiller – Yale University


All Except for SteelCommodity Prices

Source: WSJ, London Metal Exchange, BLS3/12 Rates-of-Change

-18.3% Zinc-11.1% Alum

10.6% Steel

-6.9% Copper

-60

-30

0

30

60

90

120

150

-60

-30

0

30

60

90

120

150

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 '24

All Others Copper & Steel


US Mortgage Rate Are Heading Higher in the Next CycleUS 30-Year Mortgage Rate

0

1

2

3

4

5

6

7

8

0

1

2

3

4

5

6

7

8

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19

Source: Wall Street Journal30-Year, Percent


Leading Indicators


ITR’s Leading Indicator™ Says Problems AheadUS Industrial Production to ITR Leading Indicator™

-15

-10

-5

0

5

10

15

-15

-10

-5

0

5

10

15

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22

IndicatorUS IP

Indicator - Monthly

US IP - 12/12

Sources: FRB, ITR EconomicsUSIP – 12/12 Indicator - Monthly

Reported in ITR Trends Report – ITR Advisor


Leading Indicator System as a Powerful ToolUS Industrial Production Index to Leading Indicators

-60

-40

-20

0

20

40

60

-15

-10

-5

0

5

10

15

'94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22

US IP - 12/12US IP ForecastG7 Indicator - 1/12PMI - 1/12Wilshire Market Cap - 3/12JP Morgan Indicator - 3/12

PMI, Wilshire, G7US IP, JP Morgan

Sources: FRB, OECD, ISM, Yahoo Finance, IHS MarkitRates-of-Change


Copper is Signaling a Slowdown in SpendingUS Copper Futures Prices to

US Nondefense Capital Goods New Orders(excluding aircraft)

-4.0%

5.3%

-30

-20

-10

0

10

20

-150

-100

-50

0

50

100

'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 '24

Capital GoodsCopper

Copper Futures Prices

Capital Goods

Sources: WSJ, Census Bureau12/12 Rates-of-Change

21


-15

-10

-5

0

5

10

-45

-30

-15

0

15

30

'96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23

Construction - 12/12

Indicator - Monthly

IndicatorConstruction

Monthly 12/12

ITR’s Leading Indicator Says Cyclical Rise in 2019US Private Nonresidential Construction to ITR Leading Indicator

Sources: US Census Bureau, ITR Economics Rates-of-Change

ITRLI Leads by 20 months


People


Ohio to Clermont County Personal Income

Source: BEA, Annual data through 2017Billions of Dollars

24

$0

$2

$20

$20

$200

$2,000

1969 1974 1979 1984 1989 1994 1999 2004 2009 2014 2019

Ohio

Personal Income, Ohio

Personal Income, Clermont County

Clermont County


Clermont County Per Capita Personal Income

Source: BEA, Annual Data Through 2017Thousands of Dollars

25

$28,000

$33,000

$38,000

$43,000

$48,000

$53,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Clermont County per Capita Income

$33,047

$50,003


State Population Growth Rates

Source: US Census BureauPercent Change from Population Estimates 2010 to 2018


US to Ohio to Clermont County Population Trends

Source: Census Bureau 27

6.0%

Overall Population Growth (2010-18)

1.3%

*Clermont County 3.5%*Clermont data point is from 2017


Searching for a RecessionITR Retail Sales Leading Indicator to US Retail Sales’ 12/12

Sources: Google, US Census BureauRates-of-Change (Search Interest has a 16 month lead time)

-24

6

36

66

96

126-12

-8

-4

0

4

8

'06 '08 '10 '12 '14 '16 '18 '20 '22 '24

Retail Sales

Retail Sales - 12/12

Search Interest - 3/12

3/12

12/12

Search Interest


Clermont County Single-Family Housing Unit Building Permits

-1.9%

10.9%

499.0

0

500

1000

1500

2000

2500

3000

-240

-180

-120

-60

0

60

120

'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22

R-O-C MMT

3/12

12/12

3MMA

12MMA

Source: Census BureauUnits

29


Cincinnati Vacancy Rates

Source: Census BureauRaw Data

30

6.7%

1.7%0

2

4

6

8

10

12

14

16

0

2

4

6

8

10

12

14

16

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Rental Vacancy

Homeowner Vacancy

Cincinnati, OH-KY-IN MSA


Ohio to Cincinnati Housing Price IndexCincinnati, OH-KY-IN Metro Area

Source: Federal Housing Finance AgencyRaw Data, 1991 = 100

31

Same property sales/refinancing

135

150

165

180

195

210

225

135

150

165

180

195

210

225

Ohio

Cincinnati


US to Ohio Unemployment Rates

Source: BLSPercent

2

3

4

5

6

7

8

9

10

11

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18U.S. Ohio

32

February 2019

OH 4.6%

US 3.9%

Clermont County

4.2%


In Search of More and More LaborUS Private Sector Employment

Source: BLSAnnual Data Trend

33

88

98

108

118

128

85

95

105

115

125

'92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 '24

Employment Mils of Jobs

Private Sector Employment GrowthJob Openings 17.5% C

1.9% B6.6 mils people


$1.7

12.7

11

12

13

14

15

0

1

2

3

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21

Employment, MilsRIA Shipments, Bils $

RIA Shipments

Employment

Automation/Robots Do Not Hurt Mfg EmploymentRIA Shipments to US Total Manufacturing Employment

Sources: Robotics Industries Association, Bureau of Labor StatisticsAnnual Data Trends


Wages Are Rising in Clermont CountyClermont County, OH Average Annual Wages

1.6%3.1%

$43.0

32

36

40

44

48

52

56

-20

-15

-10

-5

0

5

10

'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22

MMAR-O-C3/12

12/12

3MMA

12MMA

Source: BLS, Data through June 2018Thousands of Dollars

35


Cyclical Rise in Prices IndicatedConsumer Price Index for Health Insurance

Source: Bureau of Labor Statistics2005 = 100

9.1%

3.0%

138.1

100

110

120

130

140

150

160

170

180

-30

-24

-18

-12

-6

0

6

12

18

'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22

MMAR-O-C

1/1212/12

Raw12MMA


Rising as ExpectedUS National Defense Expenditures to US Defense Capital Goods New Orders

-45

-30

-15

0

15

30

45

60

75

-12

-8

-4

0

4

8

12

16

20

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

OrdersExpenditures

Expenditures

Orders

Obama

Source: Bureau of Economic Analysis, US Census Bureau12/12 Rates-of-Change

37

Reagan Bush Clinton BushCarter Trump


The Long ViewProsperity in the Age of Decline


A Model for the FutureUS Industrial Production Index

2

4

6

8

10

12

2

4

6

8

10

12

'20 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 '33 '34 '35 '36 '37 '38 '39 '40

12MMA3MMA

12MMA

3MMA

Great Depression

Roaring 20s (3 recessions)

Source: FRBData Trends


Issues Government Will and Won’t TackleUS Federal Government Receipts and Payments

$0

$375

$750

$1,125

$1,500

$1,875

$2,250

$2,625

$3,000

$0

$375

$750

$1,125

$1,500

$1,875

$2,250

$2,625

$3,000

Current Tax Receipts

Consumption Expenditures

Current Transfer Payments

Interest Payments

Source: BEABillions of Dollars

40


@ITROutlook#CEOInsights

@ITROutlook#CEOInsights

90 Day Trial OfferReceive monthly updates on the economy

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Trends Report

ABOUT BRIANBrian has been delivering workshops and economic analysis seminars in 7 countries to thousands of business owners and executives for the last 35 years. During that period he has also been consulting with companies who need a domestic and global perspective on how to forecast, plan, and increase their profits based on business cycle trend analysis.

He is on the Board of Directors of the Ariens Company, a global leading manufacturer of outdoor power equipment, and a member of the Investment Committee for NorthStar Financial Services, CLS Investments in Omaha, Nebr.

ABOUT ITR ECONOMICSFounded in 1948, ITR Economics is the oldest, privately-held, continuously operating economic research & consulting firm in the United States. With a long-term 94.7% accuracy rating, ITR Economics has forecast major economic events, such as the 2008 recession, well in advance and provides reliable industry and company forecasts tailored to client’s needs. ITR Economics also offers economic webinars, subscription periodicals, consultative reports, and data collection services.

TESTIMONIALS“His presentation is always a highlight of the event. ITR has such a solid track record of forecast accuracy that he has instant credibility. Just as important, Brian is a master of weaving together different economic indicators to give the audience solid advice in a way that is understandable and even entertaining! I fully expect that we will continue

to look to ITR Economics for insight that our members can use to improve their competitive advantage.” - Steven T. King, CAE, President, Pet Industry Distributors Association

“Wow, what a fantastic talk Brian. Your perspective, advise, data, analysis, and presentation were world class. That was one of the best talks that I’ve ever attended. My CFO and I will be looking more and more at 3MMA/12MMA metrics within our industry as we get our hands on more data. By the way, you’ve got a great sense of humor that was mixed in hilariously into an extremely professional discussion about US economics.” - Dave Handman, President, Sustineo

“Brian, I must tell you that you are absolutely one of the most engaging and knowledgeable speakers that we have ever had on economics. I am going to invest in with both feet and then clear the decks in 2028. I don’t want to be behind you. Your mix on humor and knowledge makes for an incredible time. Thank you so much for your insight.” - Jack Fleischer, Hermitage Lighting

BOOKING INFORMATION

To book a speaker from ITR Economics, please call 603.796.2500 or email [email protected].

Visit www.itreconomics.com and stay intouch with us through our blog and social media.

Brian BeaulieuOne of the country’s most informed economists, Brian Beaulieu has served as CEO of ITR Economics™ since 1987 where he researches the use of business cycle analysis and economic forecasts to increase profitability. Brian has been providing workshops and economic analysis seminars in 7 countries to thousands of business owners and executives for the last 35 years.

He is co-author of Prosperity in the Age of Decline, a powerful look at how to make the most of the US and global trends over the next 20 years. Brian also coauthored Make Your Move, a practical and insightful guide on increasing profits through business cycle changes, and noted by one reviewer as “simple, yet awesome.”

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riding the crest into 2020 - finneytown school district · forecasts tailored to client’s needs....

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