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Decelerating Rise

October 8, 2021

ITR Economics is forecasting a period of decelerating rise for 2022 — what does that mean for the economy and your business? Catch our newest TrendsTalk episode with ITR Economics CEO and Chief Economist Brian Beaulieu to learn more.

 

 

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Transcript by Rev


Hello, I'm Brian Beaulieu, CEO and chief economist for ITR Economics. And thank you for joining me for another edition of TrendsTalk. We tell people all the time that we're moving into a period of decelerating rise for 2022, and that's going to carry on into 2023. We try to describe what that means in multiple ways because when you look at the rate change slide, you see the rates of change 3/12, or 12/12 coming down. And some people, if they're not used to looking at rate of change, immediately flip that in their heads to, oh my data's going to go down. And that's not what we mean at all. Decelerating rise, the emphasis should be on the rise. And I like to use this as an example. When you look at world population growth, data goes back to 1700. The rate of increase, the rate of growth peaked in 1965, yet from 1965 to 2000, the population on planet earth essentially doubled. Okay. So it just meant we were growing at a slowing pace.

And today on planet earth is around 7.7 billion people. And you said we're in 2019, I'm sure it's a little bit above that now. We're projected to grow to about 10.9 billion people. That's a heck of a lot more people on their way onto our plant, but the rate of growth continues to diminish that whole time. And that's what it's going to be like for us in our businesses. If you're busy today, just because the rate of growth is slowing down, doesn't mean you're going to be any less busy next year, or the first half of 23. The volume of activity is going to remain incredibly high. You're going to be running, running. Just working a backlog. You're going to be exceedingly busy, even though the rate of growth slows down. Now that's in general.

Some industries are going to feel an actual downturn, minor, potentially in 22 or early 2023. And I'll go back to the population growth analogy. Not every country is seeing population growth. China is not. You look at the number of employees and the population in China, and they're both declining. The US, we're growing in terms of population and the number of workers all the time. It's the same thing with the business cycle in our businesses. It depends on the industry and the specifics. And that's why you need to take your time and run the analysis. Use data cast, which is a free trial you can use on the website. You load in your own data, and you'll see how you compare to industrial production, GDP, CapEx, all host of series and see what sort of a slow down you might expect. And whether that slow down in growth is going to mean anything more than a subtle change in slope for your data trend or a more significant change in your data trend.

That's the art of going through a business cycle that has a general soft landing associated with it, like this one. There's far too much demand still out there for us to expect a broad-based recession. Just make sure you're not one of those, like China is one of those from a demographic standpoint, where it comes around and it sneaks up on you because of some weaknesses in some particular markets. The more you know. Thank you for joining me for this edition of TrendsTalk. I'm Brian Beaulieu, we'll see you next time.

About

Since 1948, we have provided business leaders with economic information, insight, analysis, and strategy. ITR Economics is the oldest privately held, continuously operating economic research and consulting firm in the US. With a knowledge base that spans six decades, we have an uncommon understanding of long-term economic trends as well as best practices ahead of changing market conditions. Our reputation is built on accurate, independent, and objective analysis.