Most importantly, Beaulieu told attendees to bear in mind that in the U.S. "we are still able to do things others only dream about. It's your responsibility to your country to keep your company profitable."

BEAULIEU'S FORECAST: Commercial construction will cool off in the second half of 2009. There will be a 1.7% decline in industrial production in 2009 and almost 4% in 2010. Employment will continue to weaken; taxes will be raised; the housing market will see more declines in 2009 and 2010.

A WALL STREET PERSPECTIVE
Deceleration in the U.S., Then Globally

The industrial economy peaked in about mid-2006 at about 5% annualized growth, slowed down in 2007, and reaccelerated at the start of 2008, but that reacceleration will not continue, according to Michael Schneider, CPA, managing director and senior research analyst at Robert W. Baird and Company.

Companies in the valve industry are all doing well, so it's hard to imagine, "but I'm talking about basic industry, not project work," Schneider explained.

"What we are seeing [currently] is a natural maturation" of the industrial capitalization market, but production for both the U.S. and global industries is past a mid-cycle slowdown. In the U.S., growth rates will decelerate through 2008 and into 2009 followed closely by a slowdown in global growth rates into 2009, he said.

The cycle is the same as in previous downturns: The Purchasing Managers Index (PMI) peaks about 4 years from the bottom, real GNP peaks about 4.5 to 5 years from the bottom, and industrial production peaks 5 to 6 years out, which means we still have a ways to go before economies will start to pick up, Baird said.

For specific industries, he said:

The oil & gas upstream market, for the short term, is "surprisingly strong." A year ago, he predicted it would be declining in 2008, but what happened was a surprising reacceleration, which he said will continue into 2009 with rates declining in 2010. Rig activity will be subdued, but project size and cost will grow, driven by under-investments since 1991, as well as global demand surges, depletion of mature fields and the need for new technologies to recovery supplies from sources such as the Canadian tar sands, deep water, shale and directional drilling.

The oil & gas downstream market is "surprisingly weak," Schneider said. For the first time in 5 years, the market has been substantially lower for over a year, he said. Meanwhile, record capacity additions are occurring in China, India and the Middle East. "This is great for you now, but as we get into 2011 or 12, we will be facing overcapacities," he said.

The chemical processing industry, "I would position as steady," Schneider said. The industry should benefit from lower gas prices, a reacceleration of domestic spending on chemical processing and a slight moderation in overseas spending. The call for oil and gas alternatives will drive a call for coal gasification projects going forward.

In the power industries, coal is clearly under stress "but hardly dead." 2009 and 2010 will see significant spending on global power capacity addition so power remains a good market for investments.

Although there is a huge need to invest in water and wastewater both here and abroad, "the money is simply not going to be there," Schneider said.

SCHNEIDER'S FORECAST: Capital spending in upstream O&G will remain strong through 2011, but growth rates should slow substantially. Despite short-term strength, the next five years will see growth at about 7%, compared to 24% from 2003 to 2007. Downstream capital expenditures will decelerate to 3% by 2011 as significant capacity comes on line. Spending on chemical processing should increase "meaningfully" in 2008 and reach a similar level to the $1.1 billion spent in 2002. Capital expenditures will grow at about 7% through 2011. The natural gas industry will be the fastest grower among power industries at about 145% over the next 25 years. The amount of power generated by oil will decrease 20% over that time.

INTERNATIONAL ECONOMY
A Double Whammy

The global economy is experiencing a "double-shock" of a financial crisis plus inflationary pressures, but it is not yet in a world-wide recession, according to Zbyszko Tabernacki, CFA, executive managing director of the Country Intelligence Group for Global Insight.

Seven to 10 months ago, when clients asked what factors could bring the world into a recession, he named three developments that would need to take place consecutively: a major financial crisis in global financial institutions that would bring a credit crunch in all the countries affected, an oil shock such as the one we've just gone through, and a hard landing for China (which hasn't yet occurred).

When the figures on the first two elements are added, "We don't get recession figures," Tabernacki said. But the world is "not out of the woods yet."

One of the realities of today's global market is that it runs at two speeds: developed countries and those that are emerging, Tabernacki pointed out. Right now, the developed world is slowing down in growth, while the other half is running at growth levels averaging 3% to 5%. However, one of the great myths-that de-coupling (one country separating itself from others economically) can still occur-is starting to be disproved, he said. Eventually, the emerging markets will slow alongside developed areas.

As far as trade, in the last decade, trade flows shifted toward developing Asia and other countries, while the role of the U.S. as a market for other countries' exports declined. But 18% of the world's demand for consumer goods still comes from the U.S., so what happens here will continue to affect the world.