Is This As Good As It Gets?
It is often said the only consistent thing in life is change. And when it comes to the economic state of the United States, nothing could be truer. In recent years we’ve experienced thriving economic times, such as the mid-2000s and then crashing economic times, such as 2007, 2008, and 2009. The economy has come a long way since the bottom fell out and there seems to be more stability now, even if we haven’t gotten back to the thriving times of the early 21st century.
With that said, what can contractors expect moving forward? IE3 spent some time chatting with Lowell Catlett, a futurist, economist, and professor at New Mexico State University about the current economy and what the future may hold for us.
The Economy Has Improved, But Not To Previous Levels…Why?
A question that is often asked when it comes to the economy is, “Why haven’t we gotten back to the booming economy we were experiencing in 2004, 2005, and 2006?”
Catlett explains this very simply. It’s not that we are not experiencing a growing economy; it is that we are not seeing it as much as other places, because we have the world’s largest economy.
“Larger economies grow slower than emerging economies,” says Catlett. “At 17 trillion dollars, a 3 percent growth in actual output translates to a 9 percent growth in a 6 trillion dollar economy. A three percent growth rate for the U.S. is excellent and is probably the new norm.”
So, while it seems that we are still slowly growing, we are actually in good shape to continue down a path of stability.
Catlett also pointed out that while things seemed dismal for the economy, “Consumer expenditures, while they slowed, actually helped mitigate the last recession and continued to be a the major force for economic growth.”
What’s Going To Happen Over The Next 12 Months?
As you know, ACCA asks its contractors each month, via the Contractor Comfort Index (CCI) survey, how they feel about short-term economic growth. And in 2014, in no uncertain terms, contractors have told ACCA that they are feeling good about growth with the CCI staying well about previous years’ numbers and reaching an all-time high of 86 in May 2014.
With such a positive outlook, it begs to be asked if this is just an anomaly or is this something that is a trend throughout other industries.
Catlett shared some good news about what is going on right now. He says, “The overall economy is in excellent shape with most major industries enjoying above average growth. The cost of money is low and energy prices are falling, which helps almost all industries and consumer expenditures.”
So, can contractors expect this to continue over the next year?
Catlett says that contractors should expect, “Pressure on energy prices as the U.S. continues to find and produce vast amounts of natural gas and petroleum products.”
The U.S. has emerged as a major exporter of natural gas, the trend of falling energy prices should continue.
Catlett does note that Americans are going to see an increase in interest rates over the next 12 months; however, “the increase will be slight and interest rates will remain lower than at almost any time in history.”
With falling energy prices and low interest rates, contractors have a unique opportunity to encourage customers to invest in home improvements. Home performance services that were previously seen as too expensive may now seem affordable when sold as ways to improve the occupants’ comfort, health, and well-being.
Will 2016 Cause Any Economic Issues?
November 2016 is a lot closer than we all may want to think, and with that, the country will be a buzz with politics. The campaign ads will start long before 2016 even begins, as the Democrats and Republicans parade a slew of candidates for the public to choose from.
With all the questions that will swirl around with a lame duck president and the possibility of a party change in the White House, how will it affect the economy?
Catlett’s simple answer is, “It won’t.”
He says, “There is no good measures that exists to determine the effects of political actions on the economy, and certainly the world’s largest economy has too many factors that make it impossible to measure with any degree of confidence.”
Let’s Navigate 2015
With all that information, you may be wondering what 2015 really holds for contractors. The answer is opportunity, if you position yourself properly.
Catlett points out that, “As of October, 2014, the net worth of U.S. households stood at 83 trillion dollars—the largest ever in history.”
There is a lot of money out there to be spent and two-thirds of it is controlled by the baby boomer generation, who are at a point in their lives where they are beginning to make changes to their job and living situations.
Catlett says, “The boomers are having a huge effect on the housing industry, because they are making a lot of decisions about where they live – downsizing or upsizing to their dream homes, – as well as helping their children and grandchildren make those decisions.”
Baby boomers are going to be a key factor for contractors continued success, because they are the ones who have the money and are willing to spend it. Smart contractors will focus their marketing on this demographic, so they are better positioned to get some of the money that they have to spend.
WANT MORE THOUGHTS ON OUR ECONOMIC FUTURE?
The economy is not simple and it is constantly changing. But if you want to learn more about what to expect, you will want to be at ACCA 2015 & the IE3: Indoor Environment & Energy Expo taking place March 16 – 19 at the Gaylord Texan, because Lowell Catlett is the opening keynote speaker on March 16. He is our most popular keynote speaker ever and he is going to share even more in-depth information about what you can expect from the economy moving forward.
You can learn more about his keynote presentation, and everything happening at ACCA 2015 and the IE3 at www.accaconference.com. This is also where you can register for the event. Register by March 2 and pay only $6for full access to this year’s event.
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