Post on 26-Dec-2015
September 2010
Presented By:
ITR
Brian Beaulieu
brian@itreconomics.com www.itreconomics.com
2
itreconomics.com
US Industrial Production to Gross Domestic Product3/12 Rates-of-Change
-15
-10
-5
0
5
10
15
'82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12
-15
-10
-5
0
5
10
15
GDP
US IP
3
itreconomics.com
Global Industrial Production Indices12/12 Rates-of-Change
-25
-20
-15
-10
-5
0
5
10
15
'00 '02 '04 '06 '08 '10 '12 '14
-25
-20
-15
-10
-5
0
5
10
15
12.2 - SE Asia
-0.7 - Europe
6.8 - Japan
1.0 - Mexico
8.3 - Brazil
2.1 - US
ITR Trends Report
4
itreconomics.com
Consumer Loan Delinquency Rates3MMA and 12MMA
-2
0
2
4
6
'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 12-2
0
2
4
6
4.6%
4.7%
5
itreconomics.com
Delinquency Rates for C&I Loans3/12 &12/12 Rates-of-Change
-80
-40
0
40
80
120
160
'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 12-80
-40
0
40
80
120
160
3/12
12/12
25.0%
77.8%
6
itreconomics.com
Corporate Profits, $ Billions
$28.1
$28.3
$84.0
$75.2
$75.0
$183.7
$139.9
$24.7
$30.0
$80.4
$83.5
$99.0
$150.9
$258.0
$39.4
$41.5
$91.5
$112.9
$129.1
$250.4
$362.7
$0 $50 $100 $150 $200 $250 $300 $350 $400
Transportation and warehousing
Utilities
Wholesale trade
Information
Retail trade
Manufacturing
Financial
Billions
2010 (1Q SAAR)
2009
2008
U.S.Bureau of Economic Analysis
7
itreconomics.com
8
itreconomics.com
President Obama’s 10-Year Deficit Projections(Baseline of Current Policy)
Billions of Dollars
-2000
-1500
-1000
-500
0
500
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Based on an Average GDP Growth of 5.04 Percent perYear from 2010-2019
236128
-158
-378-413
-318 -248-161
-455
-1552-1449
-1173
-939 -938-955 -925 -988-1013
-1031-1145
Source: A New Era of Responsibility, Table S-2, budget.gov
9
10
itreconomics.com
12MMT = 17.54
8.2%
Example: Revenue 12MMT
Monthly
Sep 09 1.47Oct 09 1.51Nov 09 1.65 3MMT = 4.63Dec 09 1.75
Jan 10 1.76Feb 10 1.64 3MMT = 5.14Mar 10 1.71
Apr 10 1.74May 10 1.54 3MMT = 4.98Jun 10 1.44
July 10 1.24 3MMT = 4.22Aug 10 1.26 3MMT = 3.95 12MMT = 18.70Sep 10 1.74 3MMT = 4.24 12MMT = 18.97
11
itreconomics.com
ANNUAL MOVING TOTAL (12MMT) AS OF 8/10ANNUAL MOVING TOTAL (12MMT) AS OF 8/09
= 1/12
3-MOS MOVING TOTAL (3MMT) AS OF 8/103-MOS MOVING TOTAL (3MMT) AS OF 8/09 = 3/12
= 12/12
ACTUAL MONTHLY DATA AS OF 8/10ACTUAL MONTHLY DATA AS OF 8/09
RATE-OF-CHANGE
ITR Trends Report
12
itreconomics.com
US Industrial Production Index to Foods Production12/12 Rates-of-Change
-15
-10
-5
0
5
10
15
20
1975 1980 1985 1990 1995 2000 2005 2010 2015
US IP
-6
-4
-2
0
2
4
6
8Production
US IP
Food Production
13
itreconomics.com
Food ProductionN311, 2002=100
-15
-12
-9
-6
-3
0
3
6
'94 '96 '98 '00 '02 '04 '06 '08 '10 12
R-O-C
82
90
98
106
114
122
130
138MMA
4.0
100.9
5.0
Oct '03
Apr '04
Jul '06
Jan '06
12MMA3MMA
3/12
12/12
14
itreconomics.com
US Industrial Production to Pet Food Expenditures12/12 Rates-of-Change
-16
-12
-8
-4
0
4
8
12
16
'82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12
Expenditures
-12
-9
-6
-3
0
3
6
9
12Index
Expenditures
Index
15
itreconomics.com
US Industrial Production to Plastics Products Production12/12 Rates-of-Change
-18
-12
-6
0
6
12
'94 '96 '98 '00 '02 '04 '06 '08 '10 '12
US IP
-18
-12
-6
0
6
12
Plastics
US IP
Plastics
16
itreconomics.com
US Industrial Production to Medical Instruments Production12/12 Rates-of-Change
-12
-9
-6
-3
0
3
6
9
'96 '98 '00 '02 '04 '06 '08 '10 12
US IP
-16
-12
-8
-4
0
4
8
12Production
US IP
Instruments Production
17
itreconomics.com
Pharmaceutical Production N3254, 2002=100
-40
-32
-24
-16
-8
0
8
16
'94 '96 '98 '00 '02 '04 '06 '08 '10 12
R-O-C
40
60
80
100
120
140
160
180MMA
0.5
101.8
2.5Sep '05
Sep '06
Jul '06
Sep '05
12MMA
3MMA
3/1212/12
18
itreconomics.com
Computer & Electronic Products New Orders to Americas Chip Shipments
12/12 Rates-of-Change
-30
-20
-10
0
10
20
30
40
50
'94 '96 '98 '00 '02 '04 '06 '08 '10 12
Computer
-60
-40
-20
0
20
40
60
80
100Shipments
Computer New Orders
Chip Shipments
19
itreconomics.com
Nondefense Capital Goods New Orders toElectro medical, Measuring, and Control Instruments New Orders
12/12 Rates-of-Change
-30
-24
-18
-12
-6
0
6
12
18
24
'94 '96 '98 '00 '02 '04 '06 '08 '10 12
Electromedical
-30
-24
-18
-12
-6
0
6
12
18
24Capital
Electromedical Instruments
Capital Goods
20
itreconomics.com
Trends 10
2006-2009 2010-2013
New Orders
Financial
Sales
Housing
ProductionPrices
Foreign
Nonresidential Construction
Medical
Wholesale Trade
ITR Trends Report
21
itreconomics.com
Mortgage Rates to Federal FundsRaw Data
-2
2
6
10
14
18
22
1975 1980 1985 1990 1995 2000 2005 2010 2015-2
2
6
10
14
18
22
Mortgage Rates
Federal Funds
22
itreconomics.com
Short-Term Interest Rates to US Gov’t Long-Term Bond YieldsAnnual Data Trends
0
4
8
12
16
20
'80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '120
4
8
12
16
20
Short-Term Interest Rates
Long-Term Bonds
23
itreconomics.com
-25
-20
-15
-10
-5
0
5
10
15
'94 '96 '98 '00 '02 '04 '06 '08 '10 12
R-O-C
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0MMA
3.930
2.20.8
Sep '08
Sep '07
Jul '95
M2 Money SupplyTrillions of 82$
12MMA
Actual
12/12
1/12
ITR Trends Report
24
itreconomics.com
US Industrial Production to Corporate Bond Prices12/12 Rates-of-Change
-15
-10
-5
0
5
10
15
1975 1980 1985 1990 1995 2000 2005 2010 2015
US IP
-30
-20
-10
0
10
20
30Bonds
US IP
Corporate Bonds
ITR Trends Report
25
itreconomics.com
-24
-18
-12
-6
0
6
12
'94 '96 '98 '00 '02 '04 '06 '08 '10 '12
R-O-C
65
80
95
110
125
140
155MMA
7.57.1
107.4
U.S. Composite Leading Indicator1996 = 100
12MMA
Actual
12/12 1/12
ITR Trends Report
26
itreconomics.com
-40
-20
0
20
40
60
80
'92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12-40
-20
0
20
40
60
80
1/12
12/12
Dec '09
Dec '08
Purchasing Managers IndexISM
ITR Trends Report
27
itreconomics.com
-90
-60
-30
0
30
60
'94 '96 '98 '00 '02 '04 '06 '08 '10 '12
R-O-C
200
1000
1800
2600
3400
4200MMA
19.2
2.8
1092.5
Aug '09
Sep '07
Sep '09
Dec '07
Stock Prices IndexS&P 500,1941 – 43 = 10
12MMA
Actual
12/12
1/12
ITR Trends Report
28
itreconomics.com
-21
-14
-7
0
7
14
'94 '96 '98 '00 '02 '04 '06 '08 '10 '12
R-O-C
1.00
1.75
2.50
3.25
4.00
4.75
MMT
0.4
2.5
$2.048
May '06
Jul '05
Retail Sales Excluding AutomobilesTrillions of 82-84$
12MMT 3MMT
3/1212/12
ITR Trends Report
29
itreconomics.com
Personal SavingsBillions of $, Annual Data Trend
SAAR
0
200
400
600
800
1000
'80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 12
0
200
400
600
800
1000
Source: Bureau of Economic Analysis
30
itreconomics.com
Higher Education Expenditures to Retail Sales excluding Autos 12/12 Rates-of-Change
-9
-6
-3
0
3
6
9
12
15
18
'82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12
Education
-6
-4
-2
0
2
4
6
8
10
12Sales
Education
Retail Sales
31
itreconomics.com
-90
-75
-60
-45
-30
-15
0
15
30
'94 '96 '98 '00 '02 '04 '06 '08 '10 '12
R-O-C
0.2
0.7
1.2
1.7
2.2
2.7
3.2
3.7
4.2
MMT
-6.8-4.3
0.586
Mar '06
Feb '08
Sep '09
Mar '01
Housing StartsMillions of Units
12MMT3MMT
3/1212/12
ITR Trends Report
32
itreconomics.com
33
itreconomics.com
Phase A Phase B Phase C Phase DPhase A
A A
Phase A Phase B
A
B
A
B
Phase A Phase B Phase C
A
B C
A
B C
Phase A Phase B Phase C Phase D
A
B C
D A
B C
D
Four Phases
Bankrupt
Expansion
ITR Trends Report
34
itreconomics.com
Phase Management ObjectivesTM:
Phase Late D – Recession Early A - Early Recovery
1. Prepare training programs
2. Negotiate union contracts if possible
3. Develop advertising & marketing programs
4. Enter or renegotiate long-term leases
5. Look for additional vendors
6. Capital expenditures & acquisitions considered in
light of market-by-market potential
7. Make acquisitions – use pessimism to your
advantage
8. People will be scared – lead with optimism and “can
do” attitude
ITR Trends Report
35
itreconomics.com
Phase Management ObjectivesTM :
1. Positive leadership modeling (culture turns into behavior)
2. Establish goals: tactical goals which lead to strategic achievement
3. Develop a system for measurement and accountability re: #2
4. Align compensation plans with #2 and #3
5. Process standardization
6. Judiciously expand credit
7. Check distributions systems for readiness to accommodate
increased activity
8. Review and uncover competitive advantages
9. Invest in customer market research (know what they value)
10. Improve efficiencies with investment in technology and software
Phase Late A - Recovery:
ITR Trends Report
36
itreconomics.com
Phase Management ObjectivesTM :
11. Start to phase out low margin work
12. Add sales staff
13. Build inventories, commoditized items (price)
14. Introduce new product lines
15. Capital equipment orders
16. Begin advertising and sales promotions
17. Hire to fill skill gaps
18. Implement plans for facilities expansion
19. Implement training programs
Phase Late A - Recovery:
Part 2
ITR Trends Report
37
itreconomics.com
Phase Management ObjectivesTM :
1. Accelerate training
2. Check the process flow for possible future bottlenecks
3. Continue to build inventory
4. Increase prices
5. Consider outside manufacturing sources if internal
pressures becoming tight
6. Find the answer to “What next?”
7. Open distribution channels (your own or outsource)
8. Use improved cash flow to improve corporate operations
9. Use cash to create new competitive advantages
10.Watch your debt-to-equity ratio and ROI
11.Maintain/pursue quality: don’t let complacency set in
Phase Early B - Growth:
ITR Trends Report
38
itreconomics.com
Phase Management ObjectivesTM :
1. Stay in stock on A items, be careful with C items2. Consider selling the business in a climate of maximum “goodwill”3. Penetrate new selected accounts4. Develop plan for lower activity in traditional, mature markets5. Freeze expansion plans (unless related to
“what is next”)6. Spin off undesirable operations7. Consider taking on subcontract work if the backside of the cycle
looks recessionary8. Stay realistic – beware of linear budgets9. Begin missionary efforts into new markets10.Communicate competitive advantages to maintain margins
Phase Late B Early C - Prosperity:
ITR Trends Report
39
itreconomics.com
Find a way to do business in the “counter-cyclical” or largely unaffected areas:
Energy Green Water Canada / Exports Higher Education Health Care Practices
Food/Leisure Pets Funeral Services Alcohol Security Legal Services
(Diversified)
40
Demographics
Winning Demographics
USA ~ 300 Million grows to 400 – 500 Million
India
Indonesia
Australia
Brazil
Negative Demographics
China
Europe
Japan
RussiaSource: United Nations
41
itreconomics.com
GDP, Bils of US $, Current Prices
Percent of World GDP
3.8%
25.6%
8.8%
8.5%
5.8%
4.6%
United States
Australia
Mexico
IndiaCanada
Brazil
United Kingdom
Italy
Russia
SpainG
erm
any
China
Japan
France
S. K
orea
For follow-up questions, spreadsheet,TrendCastTM or Forecast information
please contact:
Barbara@itreconomics.com603-796-2500