Dealing with Depression

What could be better than getting a free trip to Paris? As a journalist, I was going to have to walk a trade show for several days, but I considered this a small price to pay for returning to a city I’m immensely fond of, at no cost to my bank account. It wasn’t till I arrived at the airport that I became aware of a terrible problem: The travel agency had failed to book my flight. I couldn’t reach my boss, so I swallowed hard and bought a $2,000 ticket with my company credit card.

It was unequivocally the worst flight of my life – the turbulence in my head was frightful. I couldn’t sleep a wink, wondering if I’d done the right thing while also despairing whether the same neglect in arrangements might turn up again at the hotel where I was due to stay. Feeling out of control, unable to take corrective action – that’s a special kind of torment, isn’t it.

Fortunately, in business, journeys that take undesirable turns from external forces never render distributors powerless. That was the message I took away from ITR Economist Alan Beaulieu’s spring presentation at ISA24. Inspired by this issue’s Q&A with AMT Economist Chris Chidzik (who shares some midyear outlook data and thoughts starting on page 32) I got the urge to listen through the Beaulieu recording I made back in April.

HERE IT COMES

Hearing Alan’s six-year outlook tends to give one a sensation of dread, because he builds a strong case for the onset of a Great Depression in 2030. To date, the man whose firm boasts a 98% forecasting accuracy rate, is unwavering in this prediction.

The depression Alan predicts is largely going to be a product of national debt. “This administration is spending an incredible amount of money. And when the government spends a lot of money, it creates inflation . . . in the meantime, the Inflation Reduction Act, the CHIPS Act, the infrastructure bill – all of that is creating a lot of spending . . . But stop and think: all that spending comes at a cost. And the cost is going to be one of the reasons why we have the depression,” Alan said. All this will collide with America’s crushing interest payments, soon to equal what we spend on defense. Tack on Medicare and Social Security, he added, and “it becomes an unaffordable situation without massive increases in taxes or massive government cutbacks in spending. Either one creates an economic downturn. Enjoy the ride now, but understand it feeds into the problem of tomorrow.”

NOT THE END OF THE WORLD

Now, fight the urge to be discouraged. As Alan reminds, “It’s just a depression, it’s not the end of the world.” And before we get there, the U.S. will emerge later this year from its present mild recession into an opportunity-rich 2025, with four strong years after that, according to his math.

And distributors are not powerless to prepare for both the upswing and the downturn. Want to know what he advises you to do? Automate, create efficiencies, gear up for high product demand in ’25, rock your work culture, define your competitive advantages, develop a smart pricing strategy, and make sure you have enough cash.

Be aware and prepare. Thanks for reading!