Economic Insights for Tomorrow: A Talk with Brian Beaulieu

Transcription:

Sean Riley: So with all the fancy introductions out of the way, welcome to the podcast, Brian. Thank you, Sean. It's a pleasure to be here. Oh, the pleasure is all ours. So you spoke at the Executive Leadership Conference and right up front, you said that the economy is going to skate by in, in ‘24, but then you have 25 As I guess good years I'm looking up, could

you expand on that for our audience to touch on what exactly is going to happen there?

It's tough to talk about what exactly is going to be happening there, but the general trend is going to be the economy is going to be improving in ‘25, ‘26, ‘27, ‘28 we don't see any major stumbling blocks or really in my world, we look for economic imbalances and we don't see any imbalances.

Brian Beaulieu: We see consumer incomes continuing to go up. The trouble spots like all the deficit spending, that's a future us problem it's not likely going to impact us in that short period. The Fed looks like they're done with the quantitative tightening. I'm not sure they're going to go into quantitative easing, but the tightening portion is behind, is how we're reading the trends.

So there's really nothing in the way of the economy continuing to move up. It's not going to be glory days. It's not going to be like super fast, but we're all going to be confronted with, and I mentioned this right up front, the problems we have in front of us are these. Where am I going to find the labor I need?

Where am I going to find the working capital that I'm going to need? Do I really have a good strategic plan for managing inflation? And do I have enough energy to get all this done at this point in my career? So you got, everybody needs to answer those for themselves and their company.

Sean Riley: And that was where I was thinking how, packaging and processing can prepare for that. Make the most of that little uptick before what we're projecting to be a little bit of a downtick once we hit the 2030s. Yeah. I'm not sure everybody using little on the upside

Brian Beaulieu: or the downside there, but I'm trying to be positive here. Okay. One of the things that where everybody in this needs to do is figure out how they can.

Obviate labor in economic speak, which is how can we employ technology, not only on the processing floor or distribution floor, but in my information systems my information flows in the office. The more I can get AI is just a small part of it. It's not just AI, but the more I can get automation to replace people, the stronger I am going to be going forward because people are going to be the single most expensive and limited in supply element to what we do.

Sean Riley: Interesting. And I know that you touched on this yesterday and it's an interesting thing that you noted that manufacturing is paying, I think, as you said, almost too high of wages or paying very high wages. Opposite end of that, manufacturing is having a very hard time getting labor.

So how do you balance those two elements where they need to pay these higher wages to retain labor, but they can't find any labor to begin with. A lot of

Brian Beaulieu: A lot of it can be circumvented by having some sort of career path available to people, even on the manufacturing floor. If you can show them, they're going to learn these skills and that's going to get them into the higher wages.

At least you're matching. What they can do with the higher wages as opposed to just throwing money at a, what is very really a serious problem. Culture has an awful lot to do with retaining people also. And the geographic market that you're talking about does also. So there's no one fix, but culture is extremely important.

In my view, the affordable housing in the area where you're doing business where you're manufacturing is absolutely important. And there's some political things you can do there. Or some of the folks I know are even investing in that. Sort of housing infrastructure along with the cities or the towns in order to make some things happen in that regard.

Those aren't the things that we used to have to contend with right in the 70s and the 80s and 90s This is just a whole new paradigm.

Sean Riley: Yeah, that's very interesting I hadn't thought of the housing and things like that as being part and parcel of the whole package.

Brian Beaulieu: I tell you what some other successful companies are doing is a best practices they're subsidizing childcare right near their facilities.

So moms and dads can bring the kids, work the shift and then pick up the kids and go home. And they're also establishing healthcare facilities again, they're not establishing, they're encouraging and they're subsidizing. Um, physical assist PAs and nursing assistants and everything right near the facility to just make it a lot easier to come to work for me as opposed to this other person.

Sean Riley: Yeah, so it's more of a community than just a place where you're going to work. It's got all these other aspects to it as well. That's interesting. It seems very old fashioned almost.

Brian Beaulieu: It does. We're back to the future, man. We're back to the future.

Sean Riley: Yeah. I always find this interesting, but I'm going to put it out there anyway for the listeners.

So you can explain why that is. We have an election coming up the question's going to be, how are the results going to impact the economy and why or why not? And I know where you're going to go with it, but for those listening at home who weren't at the event, how does the presidential elections really impact the economy?

Brian Beaulieu: It's a very interesting question to be sure. Let me step back and tell you we're numbers based. economics. So the numbers are the numbers. And when you look back, there's no picking sides. No, there is no picking sides. And when I look back, we look back at Republicans versus Democrats over the years in the post world war two history, who was in the oval office.

You couldn't say under blue or under red, you're going to get slower growth or faster growth. And let's fast forward to Post Bill Clinton, so the second George Bush, when he was in office. . The average parameter to growth for the GDP was 1.9%. You go to President Obama and it was 2.0% and you go to Donald Trump and it was 1.8%.

These are very different administrations, different focus, different. social ideas. Yet the rate of growth in the economy was very stable. And that's the point. These politicians will change where we spend money. They will change who is going to be the beneficiary of the money. So far, it's really how much deficit spending are they willing to engage in that moves the needle in terms of economic growth.

And understand moving that needle in the short term gets you reelected, but it does a lot of harm to the economy in the longterm. And so they can change their policies like that. Those are what we call social programs, social policies that don't really change the economic outcome at the end of the day.

Sean Riley: Interesting. And I've always thought that was an interesting, how the numbers really don't, you know, deviate that much overall. One thing that you did say though which I'm fascinated by, and I'm curious to see. If you could expand on that, as you said, that China is going to be a problem in the near future.

Could you give what you mean by that on a, without going You know, too crazy on it, but could you tell us why, what the problem is going to be there?

Brian Beaulieu: Sure. The problem is really twofold. One their demographics are in negative trend. Their population is getting smaller and that is an exceedingly difficult situation for an economy to find themselves in.

It makes growth very difficult. And the second issue is their whole economy since about 2012 has been propped up based on leverage. And that's not a stable platform. That's a house of cards. And you're seeing that leverage just collapsing. Now, when you look at the housing market and now another big developer has gone under, and you look at how much money is owed by state owned enterprises that will never get paid back.

It's just, you're on a treadmill that is totally unsustainable. And when you have fewer and fewer consumers in your economy, that leverage is only become, becomes more and more. Burdensome, if you will, which is why the government is having to become more dictatorial, if you will. And I know that's a politically sensitive term, but they're caught, they're pulling back on being capitalists in terms of finding ways to become capitalists in their economy.

And it's more and more state run state determined because they need to exert more command and control because the economy is fraying rapidly around the edges.

Sean Riley: . Okay, interesting. We hear all the time and it's I don't know if it's a media thing and maybe you can expand on it or explain it a little bit better.

But we hear all the time of when the U. S. Economy is struggling or it's doing well. But you seem to say and you've stuck to this is that it's going to remain the dominant, largest economy in the world for the next 50 to 100 years. Why is it always as going to be some big negative, is it just a political exercise or?..

Brian Beaulieu: It is a political exercise. I'm not a politician, but I've studied politics and reassociation with economics amongst other things. And if the politician can create pain in your mind, then they can position themselves to be the solution to that pain or that problem.

And that's why you're going to vote for them. If you run and think of Tim Scott, just in the most recent. primary season. He was going around saying, this is the best country on the planet. There's some things we got to work on, but we know that we can. He was a message of hope. He was, and I'm not saying he was perfect.

He certainly wasn't. But his message of hope, and we got this, went absolutely nowhere. Because you vote for people who say, I can fix this problem for you. Not, let's work together because we're the best there is.

Sean Riley: With that in mind from a positive standpoint then, you're stating that the economy is going to remain the largest in the world going forward, correct?

Brian Beaulieu: Correct. For three very good reasons. One, our demographic trend is positive. Could be even better, obviously, but it is positive. Two, we have been mightily blessed with natural resources here in the United States. Our geography is amazing. And third, we still have the rule of law. And the simplest way to express that is we have intellectual property rights, we have private property rights, and we have bankruptcy laws that allow us to fail.

Get back on our feet and try again. There's no place on this planet outside of the United States where you're going to find all three of those factors in existence at the same time in the same geography. This is a unique American experience.

Sean Riley: Very interesting. Okay. I know that this is the elephant in the room that we've been talking about. For a little while, as you've given presentations at various PMMI events, but you've noted a depression that's coming in the 2030s. It's not going to be pretty.

So I guess, A, is there anything that we can do to avoid it, which I think I know the answer to. And B, what can companies and people listening to this do to prepare for it?

Brian Beaulieu: There's always something that you can do if we means the government but they're not going to because that would not get them re elected.

So that's not going to happen I think we can safely rule that one out. So i'm going to focus more on businesses and individuals businesses need to Start figuring out and we help them with this what markets are going to be relatively safe during the 2030s and what markets are going to get absolutely clobbered.

And it doesn't matter if I'm currently involved with the relatively safe ones, I have five, six years to get something going and start gaining market share in those relatively safe areas. And really downplay the areas that we think are going to get hurt and hurt. So you can rebalance your company. You still have time to do that.

The larger the company, the more difficult that is. Although I guess if you get really large, you can always make an acquisition into the safer space for one's individual self. We have described it at the meeting laid out like a financial bunker program. Get these things about your life in order.

before we hit the 2030s. And my goodness, talk to your kids about what they're studying, what career paths they should be thinking about if they're graduating anytime near the 30s or in the 2030s. Because that's critically important to their long term well being.

The whole reason we do this, Sean, and we being Alan, I wrote that book in 2014 is not to scare people, but to forewarn them. If you're forewarned, you're forearmed. More people become millionaires during bad times than during the good times. And it's those who become millionaires are the ones that can see what's happening and change their course and use the trends to their advantage.

And that's exactly been our mission for 10 years now is to do just that.

Sean Riley: And we appreciate that very much. And thank you for that. That's what I had. And that's, that, that's why I wanted to end with that question of what we can do going forward. So I want to thank you for adding an additional time onto your schedule to, to come on here and record the podcast with us.

Brian Beaulieu: My pleasure. I'd be happy to do this anytime. And you have, you're part of a great organization and at long may it prosper. Thanks.