Futurist Reynolds returns to TTMA Convention and pronounces that he is more positive today than I've been in 18 months
Jul 1, 2009 12:00 PM, By Rick Weber
Don Reynolds, president of 21st Century Forecasting and an internationally known professional futurist, painted a dour picture when he spoke at the Truck Trailer Manufacturers Association (TTMA) convention last year — even more dour than the picture painted by various economists who spoke at industry trade shows throughout the year.
And he was on target.
As he spoke at this year's convention, he said that there was a “lot of human misery going on” in the United States, with bank robberies up 35%, food-stamp applications up 46%, and pawn-shop activity up 32%.
The economic meltdown had truly become a “global event,” he said, with China's industrial production down 23%, Korea's industrial production down 38%, and German exports down 19%.
“I'm not afraid to deliver bad news,” he said of his reputation.
However, the news this time was not as bad. He said he is “probably more positive today than I've been in the past 18 months.”
“Here comes the good news: I think the headlines start to change by December,” he said. “I'm not going to tell you that the patient is still not sick. But by December, the bleeding will have stopped.
“To a large extent, you (in the trailer industry) are dependent on the economic health of the country. And the country's economic health is, to a large extent, controlled by economic willingness to spend money by the consumer. If consumers are spending more, this is good. It's slowly beginning to come together. When do things get better? When do we get back to where we were? I'm not sure you get back to where you were. Remember, this whole economic system we built is floating on a sea of debt — or what they call leverage — and you have to reduce your leverage at some point. I think we turn positive by the end of year and muddle through 2010 at 1-2% GDP growth. By 2011, we're back to decent numbers.”
Reynolds said the $22 trillion residential real estate market declined by 25%, so $5 trillion of home equity was wiped out. The Dow Jones went from 14,000 to 8,000, wiping out another $5 trillion. The banking system lost $2 trillion worth of equity, which is $20 trillion worth of lending. That's $30 trillion that disappeared from the economy in a year.
He said we're sick, and it's similar to a doctor saying, “You must take your antibiotic for 10 days. Do not stop or you will be even worse than before.”
“There was $6 trillion worth of stimulus,” he said. “It takes six months before it starts its impact, and a year before it's at full strength. Most of this (economic troubles) started in September or October 2008. The stimulus has barely started in the economy and probably won't impact it until this fall. The point is, the medicine has been administered. As long as the patient continues to take his medicine … But there is a danger in this process: We're going to get some nice numbers, and somebody's going to say, ‘The crisis is over. We don't need any more stimulus.’ Wrong. You do.
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