Economic forecast for 2007 through 2009

Beaulieu, the presenter of the 'An Economic Update and Forecast of the IT Services Industry' webinar covered these topics and more.

Date: January 05, 2007

Category: Everything Else

The Economic Future For Our Business
Is the economy really in bad shape? Where are we headed in the next few years? What will it mean to the IT staffing industry?  Al Beaulieu, an economist with the Institute for Trend Research has some suggested answers.

Beaulieu, the presenter of the  'An Economic Update and Forecast of the IT Services Industry' webinar covered these topics and more. As members of the National Association of Computer Consulting Businesses (NACCB), NetEffects Vice President Stephanie Schroeder and CFO Claire Nottingham were able to attend this informative webinar.
 
With a 98% accuracy rating on his economic forecasts, Beaulieu is a trusted source. According to a recent study, he noted that new IT orders track very closely with the stock market indices as well as to the US Economic Leading indicators. In addition to IT orders, Beauliie covered many other economic trends and forecasts about the economy as a whole. These included:

The Overall Economy:

  • According to his overall economic forecast, things look very good throughout 2007.
  • A decline will begin in late 2007 and will continue throughout 2008 – 2009, bringing with it a recession. According to Beaulieu, 2010 is rocky but the economy will start to improve.
  • The number of older Americans and higher energy costs will put a burden on the economy.
  • Beaulieu advised saving cash throughout 2007 to weather business through the upcoming downtime. According to him, "Cash will be king."
  • Beaulieu’s message on the US economy was one of optimism and he wanted to clear the air about some misconceptions. 
  • According to him, the media tends to report only items of concern, which tends to create an erroneous perception that the US economy is losing ground to other countries. Some startling statistics he presented included:
    o The U.S. produces 28.4% of the entire world's output, followed by Japan with 10%, Germany with 6% and China at 4.3%. 
    o From 1994 – 2003, India added 5.7 million jobs to their economy.  In that same period the U.S. added 18 million jobs. 
    o Since 2003, 5 million additional jobs have been created in the U.S.

Interest Rates

  • As an area of concern Beaulieu pointed out the number of people who refinanced homes using a variable interest rate loan.  These are generally younger folks who did not experience the high interest rates of the eighties.
  • Rates have been at historic lows throughout these young adults' lives and many assumed rates would remain so.  With interest rates rising, the impact of increased payments will hit soon.  This will negatively affect spending and the overall housing market. 
  • Interest rates in 2009 are predicted to be in the 9% range.

Where to Invest
During the webinar Beaulieu suggested investing in energy, energy and more energy as well as items that deal with an aging population such as assisted living facilities and pharmaceuticals.

Each quarter NetEffects will attend one of Beaulieu’s webinars to track how the overall economy is doing and manage its impact on NetEffects.  Staying well informed and proactive will help keep NetEffects a strong vendor for you in the future.  We will continue our commitment to continuous improvement and education to provide you with faster, smarter, better staffing solutions.

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