Last updateTue, 19 Jun 2018 2pm



2010 Market Outlook: Recovery to be Slow, But Steady

While speakers at this year’s VMA Market Outlook Workshop disagreed on exactly when recovery will get here, they all agreed we’re on our way. The trip back, however, will take some time and patience.



  • The shape of the recovery. While speakers’ ideas differed on exactly how long before the nation starts climbing its way back up, most said they do not see a W-shaped recovery. In other words, there should be no second leg to the recession. However, most also agreed that the path back up the hill won’t be an easy one—the recovery will take some time in coming.
  • A caution on unemployment. Since unemployment lags behind other indicators, most speakers pointed out that the joblessness rates have not yet bottomed out. Further pain will be felt before the situation improves.
  • Capital is king. Most presenters said the companies in the firms they were talking about that have been the most successful in riding out the recession were ones that were able to shore up cash and ensure they had sufficient working capital. Several speakers also pointed out, however, that the lending squeeze is starting to loosen and a few even said it may be time to start looking at wise ways to spend.
  • The effect of stimulus. Many of the speakers said the stimulus packages, both here and abroad, may play a role in what sectors will see the fastest recovery. In China, for example, the government is pouring money into infrastructure projects. Several speakers, in addressing U.S. stimulus packages, pointed out that because of timing, projects that are already in the design stages or that can be put together quickly, may be affected the most.

You might think that after two years of depressing economic figures, the attendees and speakers at the VMA Market Outlook Workshop, which was held in Chicago August 12 to 14, would have pessimistic attitudes. But this year’s news was not all bad—in fact if a main theme arose it was: we are on the road to recovery.

Speakers differed on what that road would look like and how much it had been washed away from the storm of the last few years. But most said permanent changes may have occurred in the process, such as increased attention on finding new sources of fuel and the need to focus more on what’s happening in the entire world, instead of just domestic markets.

Looking at the short term, the bright spots in industry are the same as last year: energy and power continue to present great opportunity; the water and wastewater markets cannot help but grow going forward because of sheer need; opportunities continue to grow in countries such as China and India. But perhaps most reassuring of all, the long-term outlook has not changed, and that is: the valve and actuator industry has traveled down treacherous economic roads before; and, as before, most companies will arrive on the other side of this recession stronger and more knowledgeable about how to be successful.

Domestic Markets
On its Way, but not at the Station

The good news is that the economic recovery is finally arriving, Alan Beaulieu, economist, Institute for Trend Research, told market outlook attendees. The bad news is that it won’t really get here until some time next year and it won’t look very pretty when it arrives.

“We have more pain to go through. But in terms of falling off a cliff, we’ve almost hit the rocks,” Beaulieu joked. Furthermore, “We will not be impressed with the recovery of 2010, but 2011 will be the good year.”

When Beaulieu spoke at VMA’s Market Outlook Workshop in 2008, the GDP was still above the zero line. Since that time, he has downgraded his own forecast—he had said it would be the worst recession since the 1980s, but now says it’s the worst since post World War II when the GDP fell to about minus 13.

In addition, “We will not begin to grow in terms of industrial production until about 2014,” Beaulieu told a groaning audience.

Some specific issues Beaulieu addressed this year included:

  • The credit crisis. Beaulieu joked that recently, he was alarmed when he turned on the TV and got both Fox and CNN headlines screaming about the evils of today’s banks. “When those two agree, it’s the end of the world,” he joked. But businesses should want banks to do well, not poorly, and what will happen is that “banks will go back to being banks”—not lending to companies with inadequate balance sheets, he said. “Until toxic assets are disposed of, they [lenders] won’t make loans again.” He also pointed out that the nation’s credit system is at normal recessionary levels, that lending will soon open up, and that interest rates are historically low for those who want to borrow.
  • Inflation. Beaulieu cautioned the audience not to believe the pundits that say inflation is not coming. Companies need to factor in price increases in the long term for raw materials, he explained, because if they don’t, it “will have a nasty impact in that it will steal purchasing power,” he said.
  • Taxes. We are now the 13th largest debt-to-GDP nation in the world, and it’s making the rest of the world nervous, Beaulieu said. Congress will have to raise taxes over the coming years, he said. Unless the federal deficit can be brought under control, the nation is creating “an odious situation for our children,” he said.
  • The stock market. All the leading indicators say the market is rebounding, so “we don’t have to rely on newspapers [to tell us what’s happening],” Beaulieu said. However, don’t expect a return to 2007 levels for some portfolios until the year 2020, he said.
  • Good places to be. Beaulieu said the industries receiving stimulus money are the ones to invest in this year. Also good are the medical industry (because of the aging population), the food industry, higher education, legal services and global energy.



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