by Pierre G. Villere
As they say, “this too shall pass,” and when we come out on the other side of current Covid-19 and social unrest stresses on our society, there are some tectonic demographic changes coming over the next decade that will dramatically change our business, and the economy as a whole.
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The headlights are pointed uphill. After weeks and months of an economic shutdown, artificially imposed by the necessity to quarantine and therefore close virtually all business activity, the U.S. and global economies are slowly re-awakening. Countries all over the world are taking phased approaches to re-opening, with constant monitoring of Covid-19 outbreaks to avoid spikes or recurrences. And as I have written previously, my view today is very different than it was in early to mid-April; I think the damage has been far greater, and runs much deeper, than I expected back then. The impact of this multi-month shutdown will take a far longer period of time to recover from, although the construction industry recovery may outpace other sectors of the economy.
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My well-known optimism, even throughout the last Great Recession, has been shaken by the swift and sudden collapse of the global economy, including ours here in the U.S., in the face of the novel coronavirus also known as Covid-19. I am not any different than most consumers, except that I probably fall within the upper tier of those who see life through rose-colored glasses, and therefore espouse optimism at every turn.
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I hope you read my column last month; I worried about the events surrounding the unfolding coronavirus epidemic in Milan and northern Italy, and feared what might happen if it struck an American city. I described the epidemic as a Black Swan, a theory that refers to unexpected events of large magnitude and consequence and their dominant role in history. I had no idea we would witness what has occurred since I wrote that column.
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For months now, I have been extolling the virtues of the U.S. economy, as well as the larger global markets, and touting the slow-but-steady strength of U.S. business and industry, especially the strong construction markets that drive volume in our concrete businesses. And as I have written so many times before, my philosophy is that “sentiment is self-fulfilling.” So now we have the coronavirus, and some of the most recent reactions to it have left me disquieted, wondering if a “Black Swan Event” could upend the U.S. economy.
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I can’t help but follow up on my column from a couple of months ago when I opined that a strong stock market was a harbinger of the economy, and what lies ahead. Now that 2019 and the decade it capped have come to an end, it’s worth reviewing the markets and what they foreshadow. In addition, the many geopolitical pressures from various directions don’t even seem to be moving the needle on the economy in particular, and sentiment as a driver of the underlying economy in general. Let’s take a look at both.
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My late business partner Bill Allen was an institution in the ready mixed concrete industry, and I was fortunate to spend 15 years working beside him and learning from a master. Industry education was of utmost importance to Bill, and he felt that because of our firm’s success, we had an obligation to give back, constantly teaching our industry how to improve financial performance, operations and safety through education.
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By: Pierre G. Villere
My wife and I were traveling recently, and we had made a reservation at a popular restaurant in the town where we were visiting. When we arrived promptly for our reservation time, the hostess politely told us it would be 15 to 20 minutes before we could be seated. We gladly sat at the bar, observing the restaurant and all the comings and goings. But one fact struck me as odd: 25 percent of the tables were empty. So on our way out, I asked the hostess about this and asked about the wait, and she explained what we all know about the current employment picture: They can’t hire enough servers and kitchen staff to maximize the restaurant’s seating capacity.
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By: Pierre G. Villere
In late June and early July, the stock market indexes all rallied to new, all-time highs, capped off by a surging Dow Jones Industrial Index that closed at a record high on the day before Independence Day. This came about as trader sentiment, whether it is the retail day trader or the institutional investor managing billions, strengthened over what appears to be a thawing on the issues of both tariff negotiations, as well as the general trade picture.
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By: Pierre G Villere
The immigration debate continues to rage in Washington, D.C., with some in the Republican party now parting ways with President Trump on the issue of the 5 percent tariff on goods manufactured in Mexico. The move has roiled much of American industry because we are so reliant on Mexican imports, and likewise our own domestic manufacturers are so reliant on exports to Mexico’s burgeoning middle class. The dispute is just another example that points to how important prudent immigration policy is for our nation, as legal immigrants have been the mainstay of America’s population growth, and corresponding economic expansion, for almost 250 years.
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