The downfall in the stock market that occurred just as the Market Outlook Workshop was about to begin was only the “prick that burst the bubble” of the miraculous exuberance the market experienced in the previous months, according to Alan Beaulieu, president of the Institute for Trend Research. What’s more, the potential negative consequences have been “way overplayed” in the media, he said.
His remarks were met with some relief on the part of the audience. Those attendees were further soothed when Beaulieu said his original forecasts that “both the global and U.S. is going to see recovery continue in 2012 and 2013 before we hit the next recession” was still on track, and that “this will be a good time to invest.”
As far as the downgrading by S&P of U.S. debt, “the bond market is telling us that foreign countries do not care about the S&P. The U.S. is still a safe haven” for investing, he said. For example, "“Have any of you noticed that we haven’t got the ‘skyrocketing’ interest rates that CNN predicted we’d get because of this downgrade,” Beaulieu joked.
Workshop attendance at this year’s event matched previous records in terms of number of registrants, with 120 people from both VMA and the Hydraulic Institute attending the event. Most of the outlook speakers over the day-and-a-half event agreed with Beaulieu that volatility in the stock market may mean the projections they were making during the workshop might look a little different. But they also agreed the changes will probably not be drastic.
“Certainly there may be some bigger dips in 2011/2012, but the bottom line is that we expect the global economic expansion will continue,” said Sara Johnson, senior research director of HIS global Insight who provided an international perspective. The expansions won’t be at pre-Great Recession rates, but that’s to be expected because the severity of the recession, along with a number of other “low probability but high impact” pressures economies have faced, she said.
Recently, that’s included withdrawal of stimulus funds around the world, sovereign debt crises in many areas of the world, geopolitical crises in areas such as Libya and an abundance of natural disasters, Johnson pointed out. For example, HIS is projecting world GDP will slow from 4.1% last year to 3.1% this year. “But 40% of that is due to Japan’s earthquake and tsunami,” she pointed out, and even that country will be in recovery mode well into 2012 and 2013, she said.
The bottom line is that the entire world, not just North America, is facing a different kind of economy than they did pre-Great Recession so “the next 20 years are going to be vastly different than the last 20 years,” Beaulieu said.