winds of change · 2018-03-27 · winds of change valve manufacturers association alex chausovsky...
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WindsofChange
Valve Manufacturers Association
Alex ChausovskySenior Analyst
First in Forecasts Since 1948
ITR Economics provides the best economic intelligence to reducerisk and drive practical and profitable business decisions.
Duration Accuracy
US GDP (Dec) 24 99.7%
US Ind. Prod. (Dec) 24 96.8%
Europe Ind. Prod. (data through Nov) 27 99.4%
Canada Ind. Prod. (data through Nov) 24 95.9%
China Ind. Prod. (Dec) 30 97.8%
Retail Sales (Dec) 25 98.0%
Housing (Dec) 27 97.2%
Employment (Dec) 23 99.6%
Preliminary 2017 Forecast ResultsIf you heard ITR around two years ago… 2
First in Forecasts Since 1948
12-Month Moving Average 12/12 Rate-of-ChangeYear-over-Year Growth Rate
• Annual Trend: • Phase: • Year-over-Year:
IndustryOutlook
2018:
2019:
2020:
US Gross Domestic ProductSAAR, Chained 2009 $
US Gross Domestic Product
$17.3 trillionB
2.5%
1.6%
1.2%
2.8%
Source: BEA 3
12
14
16
18
20
12
14
16
18
20
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21-9
-6
-3
0
3
6
9
-9
-6
-3
0
3
6
9
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21
First in Forecasts Since 1948
US Corporate Tax Rate and Gross Business Investment
Percent4
4
Sources: Tax Policy Center, FRED
0%
10%
20%
30%
40%
50%
60%
70%
0%
10%
20%
30%
40%
50%
60%
70%
'60 '64 '68 '72 '76 '80 '84 '88 '92 '96 '00 '04 '08 '12 '16
Corporate Tax Rate %
Corporate Tax Revenue (% of Corp Profits)
Gross Business Investment (% of GDP)
Linear (Gross Business Investment (% of GDP))
First in Forecasts Since 1948
ATLANTA FED IS WATCHING…On business investment, roughly two‐thirds of respondents to our national survey…indicated that the reform wouldn't affect their capital expenditures at all. Just 15 percent said they would increase their capital spending by 10 percent or more, and those responses came mostly from smaller firms.
~ Raphael BosticAtlanta Federal Reserve Chair
Rotary Club of AtlantaJanuary 8, 2018
First in Forecasts Since 1948
US Tax Rates and Real GDP Growth
Sources: Tax Foundation, BEA, 6
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
0.0%
2.0%
4.0%
6.0%
8.0%
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
Real GDP Growth Rate Top Marginal Tax Rate
Rea
l GD
P G
row
th R
ate To
p M
argin
al Tax Rate
First in Forecasts Since 1948
Percent of Total US Tax Receipts by Source to Real Gross Domestic Product
Taxes: Percent, GDP: 3/12 Rate-of-Change, December Value7
7
Sources: Tax Policy Center, BEA
8.8%
48.8%
1.8%
-10%
0%
10%
20%
30%
40%
50%
60%
-10%
0%
10%
20%
30%
40%
50%
60%
1934 1939 1944 1949 1954 1959 1964 1969 1974 1979 1984 1989 1994 1999 2004 2009 2014 2019 2024
Individual Income Taxes
Corporate Income Taxes
GDP 3/12 Growth Rate
First in Forecasts Since 1948
US Federal Government Current Tax Receipts to Consumption Expenditures to Current Transfer Payments to
Federal Government Interest Payments
Source: BEABillions of Dollars
8
$0
$375
$750
$1,125
$1,500
$1,875
$2,250
$2,625
$3,000
$0
$375
$750
$1,125
$1,500
$1,875
$2,250
$2,625
$3,000
Tax/Exp/Paym
Current Tax Receipts
Consumption Expenditures
Current Transfer Payments
Interest Payments
Interest
First in Forecasts Since 1948
Total U.S. Public Debt
Source: Usgovernmentspending.com(% of GDP)
0
20
40
60
80
100
120
140
0
20
40
60
80
100
120
140
1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020
121.3%
9
The Long View…
First in Forecasts Since 1948
CBO Projection Statistics
Data Source: CBO, 2015Billions of Dollars
A B C D E
B+C+D/E Net Interest HealthcareSocial
SecurityTotal
Spending
2015 56% 234 936 882 3,690
2030 69% 1,176 2,251 2,049 7,896
2035 71% 1,602 3,041 2,589 10,110
First in Forecasts Since 1948
US Trade Balance for Goods and Services
Source: US Census BureauBillions of dollars
-566.0
-850
-750
-650
-550
-450
-350
-250
-850
-750
-650
-550
-450
-350
-250
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 '24
3MMT
12MMT
First in Forecasts Since 1948
US Raw Steel Production Index
Source: FRB2012 = 100
7.0%5.8%
96.7
50
75
100
125
150
175
200
-200
-150
-100
-50
0
50
100
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 '24
MMAR-O-C
3/12 12/12
3MMA12MMA
First in Forecasts Since 1948
2.2%2.2%
169.2
120
140
160
180
200
220
240
-20
-15
-10
-5
0
5
10
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 '24
MMAR-O-C
3/1212/12
3MMA
12MMA
US Steel Mill Employment
Source: BLSThousands
First in Forecasts Since 1948
Share of US Steel Imports by Country, 2017
Source: Census BureauPercent of Steel Imports
16.5%
13.5%
9.9%
9.2%
8.3%
5.7%
5.0%
4.0%
3.3%
2.2%
2.1%
20.3%
-4.0% 1.0% 6.0% 11.0% 16.0% 21.0%
Canada
Brazil
Korea
Mexico
Russia
Turkey
Japan
Germany
Taiwan
India
China
Others
First in Forecasts Since 1948
Phase A - Recovery
Annual Sales are BELOWYear-Ago Levels, but the Rate-of-Decline is SLOWING.
Phase B –Accelerating Growth (Best)
Annual Sales are ABOVEYear-Ago Levels, and are GROWING at a RAPIDPace.
Phase C – Slowing Growth (Caution)
Annual Sales are ABOVEYear-Ago Levels, BUT the Rate-of-Growth is SLOWING
Phase D -Recession
Annual Sales are BELOWYear-Ago Levels, and are DECLINING at a RAPIDPace.
Business Cycles
15
First in Forecasts Since 194816
Phase B
16
First in Forecasts Since 1948
Phase C
17
vendorsvendors
Phase C – Slowing Growth
First in Forecasts Since 194818
First in Forecasts Since 1948
Leading Indicators
Rates-of-Change19Sources: FRB, ITR Economics
-20
-16
-12
-8
-4
0
4
8
12
-30
-24
-18
-12
-6
0
6
12
18
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 '24
Leading IndicatorIndustry Data
Industry Data - 12/12
ITR Leading Indicator - Monthly
The Indicator has a 12-month lead time to the Industry Data
December 2017
May 2011May 2010
First in Forecasts Since 1948
Purchasing Managers Index
Source: Institute for Supply Management1/12 Rate-of-Change
20
Leads US Economy by 9-14 months
As seen in
5.6%
-50
-25
0
25
50
75
-50
-25
0
25
50
75
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 '24
1/12
First in Forecasts Since 1948
US Industrial Production Index to US Corporate Profits
Source: FRB, Bureau of Economic Analysis Rates-of-Change
-30
-20
-10
0
10
20
30
-15
-10
-5
0
5
10
15
'92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18
US IP 12/12 ROC
US IP 12/12 ROC Forecast
Profits 3/12 ROC
Profits 3/12 ROCUS IP 12/12 ROC
3/12
12/12
First in Forecasts Since 1948
12-Month Moving Average 12/12 Rate-of-ChangeYear-over-Year Growth Rate
• Annual Trend: • Phase: • Year-over-Year:
2018:
2019:
2020:
ITROutlook
US Industrial Production Index
US Industrial Production Index
105.7B
2.5%
1.1%
-1.2%
Source: FRB
3.3%
84
89
94
99
104
109
114
84
89
94
99
104
109
114
-15
-10
-5
0
5
10
-15
-10
-5
0
5
10
First in Forecasts Since 1948
US Industrial Production Index to US Total Manufacturing Production Index
Source: FRBAnnual Data Trends
23
104.7105.7
30
45
60
75
90
105
120
30
45
60
75
90
105
120
1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025
ManufacturingUS IP
US IP
Manufacturing
First in Forecasts Since 1948
How Does Manufacturing Contribute to Exports?
Source: Census BureauDollars
24
In 2016, about 6 in 10 US Export Dollars came from manufacturers.
$797.9BManufacturers
(59.8%)
$296.6BWholesalers
(22.2%)$240.6B
Other and Unclassified(18.0%)
First in Forecasts Since 1948
First in Forecasts Since 1948
First in Forecasts Since 1948
2017 Cost:
Difference:
US-made German-made
2018 Cost:
€ 271,428
€ 237,500
- € 33,928
27
Caterpillar 996g Wheel Loader Liebherr L576 Wheel Loader
€ 245,000
€ 245,000
First in Forecasts Since 1948
Commodity Prices
Source: WSJ, London Metal Exchange, Steel Market Update3/12 Rates-of-Change
28
26.4% Zinc22.0% Alum
3.3% Steel20.8% Copper
-100
-50
0
50
100
150
200
-100
-50
0
50
100
150
200
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 '24
All Others Copper & Steel
First in Forecasts Since 1948
US Consumer Price Index to US Producer Price Index
Source: BLS1/12 Rate-of-Change
29
2.2%2.7%
-10
-5
0
5
10
-10
-5
0
5
10
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 '24
Consumer Price
Producer Price
First in Forecasts Since 1948
US Private Sector Employment
Source: BLSAnnual Data Trend
30
88
98
108
118
128
85
95
105
115
125
'92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 '24
Employment Mils of Jobs
Private Sector Employment GrowthJob OpeningsInvoluntary Part Time EmploymentQuit Rate – Rising
5.0% B1.8% C
-12.5% D
First in Forecasts Since 1948
Things to Pay Attention to in 2018 and Beyond
31
Impact of Tax Reform on US Debt
Tariffs
Weakening Dollar
Inflationary Pressures
Employee Retention
First in Forecasts Since 1948
US Nondefense Capital Goods New Orders w/o Aircraft
Source: Census BureauBillions of Dollars
32
8.4%5.8%
$781.1
500
750
1000
1250
1500
-60
-40
-20
0
20
'00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 '24
MMTR-O-C
3/12 12/12
3MMT
12MMT
First in Forecasts Since 1948
US Metal Valve Production Index
Source: FRB2012 = 100
33
2.1%6.0%
93.8
75
85
95
105
115
125
135
145
155
-60
-50
-40
-30
-20
-10
0
10
20
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
MMAR-O-C
3/1212/12
3MMA12MMA
First in Forecasts Since 1948
US Metal Valve Production Index to US Nondefense Capital Goods New Orders (excluding aircraft)
Sources: FRB, Census Bureau12/12 Rates-of-Change
34
-30
-20
-10
0
10
20
30
-30
-20
-10
0
10
20
30
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20
ProductionProduction ForecastNew OrdersNew Orders Forecast
New OrdersSales
First in Forecasts Since 1948
US Food Production Index
N311, 2007 = 100
4.7%4.1%
112.5
75
90
105
120
135
150
-12
-8
-4
0
4
8
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
MMAR-O-C
12/123/12
12MMA3MMA
First in Forecasts Since 1948
US Petroleum Refineries Production Index
Source: FRBN32411, 2002 = 100
1.2%1.0%
103.7
70
85
100
115
130
145
160
-28
-21
-14
-7
0
7
14
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
MMAR-O-C
3/1212/12
3MMA 12MMA
36
First in Forecasts Since 1948
US Chemicals & Products Production Index
Source: FRB2012 = 100
2.8%1.6%
99.4
80
105
130
155
180
-30
-20
-10
0
10
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
MMAR-O-C3/12
12/12
3MMA12MMA
First in Forecasts Since 1948
US Iron & Steel Products Production Index
Source: FRB2012 = 100
0.5%3.8%
94.7
40
100
160
220
-150
-75
0
75
'98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
MMAR-O-C
12MMA3MMA
12/12
3/12
38
NAICS 3311, 2Production index for the manufacture of iron and steel products.
First in Forecasts Since 1948
Mining Production Index(excluding oil & gas)
Source: FRB2007 = 100
-2.8%
0.9%
93.8
75
100
125
150
175
-30
-20
-10
0
10
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
MMAR-O-C
3/1212/12
3MMA12MMA
First in Forecasts Since 1948
US Ship Production Index
Source: FRB2012 = 100
40
5.5%3.0%
88.3
50
75
100
125
150
175
-45
-30
-15
0
15
30
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
MMAR-O-C
3MMA12MMA
12/12
3/12
First in Forecasts Since 1948
Electrical Utility Generation Production
2007 = 100
6.3%
1.2%
102.9
70
100
130
160
190
-12
-8
-4
0
4
8
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
MMAR-O-C3/12
12/12
3MMA12MMA
First in Forecasts Since 1948
US Paper & Products Production Index
Source: FRBN3322; 2002 = 100
-1.2-0.5
95.3
75
90
105
120
135
150
-40
-30
-20
-10
0
10
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
MMAR-O-C3/12
12/12
3MMA12MMA
First in Forecasts Since 1948
US Textiles and Products Production Index
Source: FRB2012=100
43
1.0%
-1.1%
104.0
50
100
150
200
250
300
350
400
-50
-40
-30
-20
-10
0
10
20
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
MMAR-O-C
3/12 12/12
3MMT12MMT
First in Forecasts Since 1948
US Private Nonresidential Construction
Source: Census BureauBillions of Dollars
-1.2%
0.2%
436.3
160
260
360
460
560
660
760
-80
-60
-40
-20
0
20
40
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
MMTR-O-C
3/12
12/12
3MMT
12MMT
44
First in Forecasts Since 1948
US Nonresidential Construction Starts
Source: CMD GroupBillions of Dollars
45
First in Forecasts Since 1948
US Public Water Supply Facility Construction
Source: Census BureauBillions of Dollars
46
-1.3%-8.0%
11.3
5
10
15
20
25
30
35
-80
-60
-40
-20
0
20
40
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
MMTROC
3/1212/12
3MMT 12MMT
First in Forecasts Since 1948
US Sewage and Waste Disposal Facility Construction
Source: Census BureauBillions of Dollars
47
-15.0%-16.4%
19.5
10
20
30
40
50
60
-45
-30
-15
0
15
30
'96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
MMTROC
3/1212/12
3MMT12MMT
First in Forecasts Since 194848
0
2
4
6
8
10
12
14
16
'82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20
Yield on 10 Year Treasury NoteSource: FRB
?
First in Forecasts Since 1948
FOMC Member Interest Rate Projections
Source: FRB 49
Fed Open Market Committee
December 2017September 2017
0
1
2
3
4
5
6
2017 2018 2019 2020 Longer Run
First in Forecasts Since 1948
Phase A - Recovery
Annual Sales are BELOWYear-Ago Levels, but the Rate-of-Decline is SLOWING.
Phase B –Accelerating Growth (Best)
Annual Sales are ABOVEYear-Ago Levels, and are GROWING at a RAPIDPace.
Phase C – Slowing Growth (Caution)
Annual Sales are ABOVEYear-Ago Levels, BUT the Rate-of-Growth is SLOWING
Phase D -Recession
Annual Sales are BELOWYear-Ago Levels, and are DECLINING at a RAPIDPace.
Business Cycles
2017 2018
2019
First in Forecasts Since 1948
ITR Management Objectives™Actionable Takeaways
51
1. Budget for continued economic expansion through 2018
2. Stay INFORMED – invest in your business (next Quarter)
3. Hire sales people to grow as the economy accelerates then slows
4. Add new products – new ventures buck business cycle decline
5. Focus on talent retention and training
6. Raise prices to offset higher wages, input and logistics costs
First in Forecasts Since 1948
Email [email protected] with the subject line
VMA – ALEX IS COOL!
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SPEAKER PROFILE
ALEX CHAUSOVSKY Alex Chausovsky is an accomplished Speaker and Consultant at ITR Economics. He is a highly experienced market researcher and analyst with more than a decade of expertise in subjects that include macroeconomics, industrial manufacturing, energy efficiency, automation, and advanced technology trends. He has consulted and advised companies throughout the U.S., Europe, Brazil, China and Japan for the last fifteen years.
REVIEWSAlex regularly delivers keynote addresses at leading industry events to rave reviews. His charisma, engaging personality and refreshing demeanor on stage always surpass the audience’s expectations.
His extensive consulting expertise is greatly valued by management teams of companies both large and small. ITR Economics’ clients rely on his input when developing strategic plans for the future, as he helps them plan for risk conditions and find areas of opportunity.
ABOUT ALEX
To book a speaker from ITR Economics, please call 603.796.2500 or email [email protected] www.itreconomics.com and stay in touch with us through our blog and social media.
BOOKING INFORMATION
www.itreconomics.comp. 603.796.2500 e. [email protected]
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Founded in 1948, ITR Economics is the oldest, privately-held, continuously operating economic research & consulting firm in the United States. With a long-term 94.7% accuracy rating, ITR Economics has forecast major economic events, such as the 2008 recession, well in advance and provides reliable industry and company forecasts tailored to client’s needs. ITR Economics also
offers economic webinars, subscription periodicals, consultative reports, and data collection services.
ABOUT ITR ECONOMICS
“As director of content for The Automation Conference, my main objective is to feature speakers who are both dynamic and relevant. That’s why we’ve featured Alex Chausovsky twice in the past four years. His presentations are on topic and captivating for the audience, due in large part to his clear and concise delivery of information.” David Greenfield, Director of Content/Editor-in-Chief, PMMI Media Group/Automation World
“Alex is a consummate professional, whose presenting skills are both engaging and enjoyable. He is able to put across a great deal of detailed information in an enthusiastic, yet structured fashion. He is an eloquent speaker, whom I have had the pleasure in booking for several industry based conferences that I have staged. He brings authority and gravitas to any speaking engagement, and I would have no hesitation in recommending him to others.”Andrew Castle, Managing Director, Touchwave Media
ALEX’S PRESENTATIONAlex’s presentation covers a wide variety of topics including short-and long-term global economics forecasts, regional economic updates, and outlook on inflation, and the relationship of political events and economics growth. He details the economics indicators executives should follow and provides proven strategies for leveraging economic forecasts
at the company level.
ITR has a 94.7%Forecast Accuracy.Our unmatched 94.7% forecast accuracy at four quarters out allows us to help business executives make strategic movements with confidence.
Driving practical and profitable business decisions. We are here to make you even more successful. We work to increase your foresight of the economic trends that will directly impact your business and help you plan for the future.
www.itreconomics.com // [email protected] // 603.796.2500 // @itroutlook
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