2020 – the year of living dangerously …...chris.kuehl@armadaci.com 2020 – the year of living...
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November 6, 2019Analysis of the Forces Affecting Business
Chris.Kuehl@armadaci.com
2020 – The Year of Living Dangerously (Economically
Speaking)
NREDA – Kansas CityChris Kuehl – Managing Director
Armada Corporate IntelligenceEconomic Analyst for FMA, IHEA, CCAI, FIA
2 Chris.kuehl@armadaci.com November 6, 2019www.armada-intel.com
Setting an Appropriate Level of Expectation
• Economists have successfully predicted 17 of the past three recessions
• If one places six economists in a room, one will get six different opinions (seven if one is from Harvard)
• When an accountant is asked what one plus one equals they will confidently assert the answer is “Two”. An economist will lock the doors and ask “what do you want it to be”
• Finally – economists always express a level of thanks for the existence of meteorologists as they make us look good.
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Too True
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States as Compared to Countries
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Recession in the Offing?
• YES – Build a Bunker– PMI sinks for two
months in a row– Trade war impact –
lost jobs and higher costs
– Inverted yield curve– Capacity utilization
falling– Global growth sinking
and taking US exports down
– Political nonsense
• NO – Chill Out– CMI still strong– Industrial production
up– Little pressure from
commodity pricing– Markets still healthy– Consumers still pretty
confident– Employment numbers
still holding strong position
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As US Goes – So Goes the World
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Expansion Ending?
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Who Drives the Economy?
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Consumer Spending
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Right in the Middle for Growth
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Why Aren’t Forecasts Holding
• What happened to the Phillips Curve?– Hiring the less than qualified– Growth of low paid jobs
• Why no inflation from tariffs?– Most have only been threats– Many companies in China focused on market share
• Why is growth still good?– Confident consumers– Reduced worry about inflation from commoditiues
• Why No Fallout from US isolationist approach– Noting the contradictions– Trying to focus on friends and ignoring provocations
12 Chris.kuehl@armadaci.com November 6, 2019www.armada-intel.com
Five Issues to Worry About
• Return of Recession or Inflation and Likely Fed Reaction– Commodities and Labor– Importance of FOMC personalities
• Trade War Impact– China – tariffs, structural reform and global growth– Drift away from Europe
• Labor Shortage– Hiring and productivity
• Political Stalemate– Shutdown impact– Neglecting big issues – coming off “sugar rush”
• Consumer Confidence and Retail Shifts– On-line vs. brick and mortar
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Inflation Projections
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Small Hikes Still Expected by Some
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Future Looks a Little Dimmer
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People Needed – Now!!!
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Where is Manufacturing Headed
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PMI Declines
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Overall CMI
Oct '18 Nov '18 Dec '18 Jan '19 Feb '19 Mar '19 Apr '19 May '19 Jun '19 Jul '19 Aug '19 Sep '19 Oct '19+/- -2.0 1.3 -1.6 -0.8 1.5 -1.3 0.5 1.6 -0.7 -1.6 1.8 -1.2 0.5
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
Inde
x
Combined Index Monthly Change(seasonally adjusted)
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Election Year After All
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For Those that Can’t Get Enough of This
• chris.kuehl@armadaci.com• Who Are We – check out the
website at www.armada-intel.com
• Sign up for the FREE Business Intelligence Brief. Published every Monday, Wednesday and Friday
• We are “economists for rent”. We just love to help with strategic planning by pointing out all the potential pitfalls and challenges!
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