ARLINGTON, VA. — Just weeks before the November election, a leading economist suggested that snack manufacturers look beyond the short term and to six months or even two years out to get a clearer picture on the future of the broader economy and to better position their businesses for what lies ahead.
Brian Beaulieu, chief executive officer and chief economist, ITR Economics, described the coronavirus (COVID-19) and the election as short-term distractions against longer-term trendlines for growth. He called the pandemic a “natural disaster,” not an economic one.
“There was nothing wrong with the economy before COVID hit,” Mr. Beaulieu told attendees at SNAC International’s recent Executive Livestream Forum, a digital version of the association’s annual in-person Executive Leadership Forum.
“In the long run, economic principles rule,” he said.
COVID-19, he added, won’t be a “linear journey,” with ups and downs that affect the economy and short-term business outlook. Both monetary and fiscal stimulus, he said, are fueling a renewed expansion of the economy. Gross domestic product hit its nadir during the second quarter this year and is expected to rise starting in the third quarter.
“It will be in 2022 before we fully recover, but recover we will,” Mr. Beaulieu noted.
He added that there is likely enough momentum in the economy to drive growth without future government assistance.
“We don’t need a second stimulus package,” he said. “We are not building that assumption in.”
That said, another fiscal package can’t hurt.
“If one comes about, it will simply be adding fuel to the rising trends we’re taking about,” he said.
Mr. Beaulieu encouraged snack manufacturers to take a longer look when examining their businesses and the economy. ITR Economics predicted low inflation until post-2023. He suggested waiting for the “dust to settle after the election” for capital investments, but that extremely low interest rates make borrowing today a good option for building their businesses.
He predicted a vaccine by the first quarter of 2021 and its widespread rollout to those who want to receive it in the second quarter.
“Here’s the story about COVID regarding the economy,” he said. “It only accelerated some trends and magnified some weaknesses and magnified some strengths. The department stores you have been reading about were in trouble before COVID ever hit. They were being usurped by e-commerce. They never really built robust e-commerce platforms that could deal with the likes of Amazon.”
Working at home, he added, is another trend that was around long before this year’s exodus from the office.
“It’s been accelerated because of COVID,” he said.
The move out of cities and the surge of millennials buying housing as they start families are two other trends that have pushed forward since COVID-19 struck.
He urged snack manufacturers to take advantage of the current economy. Down the line, however, he added that the current stimulus will add a “nitrous oxide” effect that could affect the economy several years down the road, eventually sparking inflation.
“The worst is behind us, and the best is yet to come,” Mr. Beaulieu said.