Members of Starnet had the opportunity to hear economist Alan Beaulieu, president of ITR Economics, share his outlook for 2018 at the group’s annual meeting in Florida. Besides being an economist, he knows a bit about the flooring business. Beaulieu was a carpet installer during college and “has feelings about it —particularly in his knees.” Ha ha.
Are your numbers growing this year? If so, Beaulieu says to, “stop sleeping and start worrying because it’s likely that you’ll just not see the train coming.”
While Starnet, and the flooring industry overall, is enjoying positive lift and a buoyant start to the year, Beaulieu advised the group that a downturn is on its way. He expects it to start later this year, or early next, but should turn around by 2020. How does he know? A number of mathematical models that run independent of politics and policies.
Leading forecast indicators are pointing downward, he said. The home builder and housing market indexes are indicating that things are going to slow down: median home square footage is 2,080 and curving downward, which indicates less flooring will be installed. Combine that with declining home inventory, a lack of qualified labor, and rising interest rates, and you have the perfect cocktail for a potential recession.
He suggests that as you begin planning budgets for 2019, don’t just look at the rapid growth of 2018 and the good growth you saw in 2017. If you do that, he said you will end up with a budget that’s not going to work and you’ll face a misallocation of assets. Say you grow 25 percent this year, as an example, he recommends moderating that projection for next year to 10 percent so that you don’t overextend yourself.
That doesn’t mean stop investing altogether, however. Beaulieu recommended that companies not make sudden reactions to the 2019 downturn. He suggests that now, in preparation, businesses should be investing in new talent, software to make their businesses run more efficiently, new equipment, websites and social presences. Make them as robust and smart as they can be.
“If you’re 50 years of age and older and you like your website, you can guarantee it’s wrong—it’s not the right website,” Beaulieu said. “Millennials want to be seeing everything they want before they prompt you.”
We have to work to keep the millennials, he said, and we need to be preparing to suit their shopping and buying preferences. With 10,000 baby boomers retiring from the workforce every day, the millennials are the future and they are demanding a high-tech environment. “If you can’t provide that, you will slowly lose market share,” Beaulieu said.
What are you investing in this year? Drop me a line at firstname.lastname@example.org.