BUSINESS FORECAST ITR ECONOMIC OUTLOOK
The Looming Depression ITR’s Alan Beaulieu discusses the company’s short and long-term economic projections BY STEVE GUGLIELMO AND ALAN BEAULIEU
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TR Economics is one of the most trusted and respected economic firms in the world. GAWDA members have seen first-hand how accurate the firm is at projecting economic activity and have been able to position themselves and their businesses accordingly. For several years now, ITR has warned of a coming Depression in the 2030s. We had the opportunity to speak with ITR President Alan Beaulieu about the looming Depression and if the recent COVID pandemic has impacted the company’s short, medium or long-term projections in any way. The following is a lightly edited transcript of the conversation.
W E LD I N G & G ASES TODAY: I T R h a s b e e n consistent in its projection of a depression in the 2030s. Have you seen anything either during or because of COVID, that would change your projection in any way? ALAN BEAULIEU: No. Actually, what we have seen reinforces that opinion, more than anything. This is not calling out President Biden or the Democrats, both parties spend an extraordinary amount of money. And both are upset at each other when the other does it, but the reality is that the deficit goes up, and up, and up no matter who is in office and when we have now unofficially adopted modern monetary theories, this just feeds into our opinion on what the whole latter part of this decade is going to look like, and we feel it’s an unsustainable trend that is leading to problems.
WGT: So, is that the biggest factor in this projection? That the bill is going to come due on all this spending that we have been doing over the past three decades? ALAN: That’s the safest answer. I could give you. This is a longer-term problem. What we have just done is established
100 • Summer 2021
that in times of extreme distress, the government will come riding in and spend money like there is no tomorrow and make everything as better as they can. And the amount of money has been incredible. And it has made a phenomenal difference. But that has become an expectation. And talking about spending and improving benefits and increasing refunds and making life better and easier, it all sounds very noble. And we don’t want to get into the moral value of it. But when the bottom falls out, and the government can’t go on printing useless currency, what have we done except set up the culture for a safety net that just won’t be there? I worry about setting up an expectation that would be difficult to meet again in ten years.
WGT: Are there any fundamental changes that can be made at this point in the game that can stave off this depression? Or is it, more or less, inevitable? ALAN: I believe it’s more or less inevitable. It’s a question of degree, not whether there will be a significant downturn. You can take a depression and make it into a heck of a recession, and it is still a big difference. A lot of this is driven by the Baby Boomers around the world and the cost of taking care of us and the extension of our lives. Between healthcare, prescription drugs, and what we call Social Security, there’s an incredible financial pressure that is building. And that means either more borrowing or higher taxes. Noticeably higher taxes on people who have been promised that their taxes won’t go up. Then you create a situation where we will be raising taxes on the Millennials, on Gen Y, Gen X, Gen Z. They’re all going to be paying more. And as they’re having to pay down deficits or at least exorbitant interest payments as part of the federal budget, while defending the nation and developing new technologies, making us all green, you can tax the nation into a situation where you’re really diminishing
