KANSAS CITY — The wholesale baking industry has plenty of reasons to be optimistic this year, and now is the time when bakers should be investing in their businesses. That was the advice from Alan Beaulieu, president of ITR Economics, who shared his 2021 forecast for the industry at his keynote address Wednesday at the American Society of Baking (ASB)’s virtual BakingTech 2021, Feb. 16-18.
“This is the perfect time for you to invest in your products and innovate,” Mr. Beaulieu said. “Whatever you need to do to get more market share, whatever product it is, whatever new methodology, whatever new message, whatever you need to do to invest in to reach more of your clients, this is the time to do it.”
Interest rates are low and should remain so in the near future because there are no general inflationary pressures on the US economy that would drive up the rates, he said, adding that the Federal Reserve board says rates likely will stay quiet into 2023. And the federal government’s stimulus is putting more cash in the hands of consumers, which is also helping the economy.
The US economy is now enjoying the effects of the last stimulus payment, and it will get another boost when Congress passes more stimulus payments in the next few weeks, Mr. Beaulieu said. Plus, the nation’s economic leading indicators are good, cases of coronavirus (COVID-19) are on the decline, and job growth is encouraging.
“Wages are going up,” he said. “More people have their jobs back.”
Investing in ways that will increase efficiency and reduce waste – both in terms of materials and the workforce – will be critical to businesses.
“The labor problems you face now are only going to get worse as we go forward. Labor rates are going up much faster than inflation,” Mr. Beaulieu said.
The push to increase the minimum wage to $15 an hour will have an impact. The Congressional Budget Office recently reported that raising the rate by 2025 would lift 900,000 people out of poverty but would cost 1.4 million American jobs.
Oddly enough, he said one of the leading indicators to keep an eye on is housing starts.
“The wholesale trade business relates well to the housing industry,” he said. “This housing starts move is extremely important to this industry because it shows people who can afford to buy houses are people who can afford to buy everything that you are about.”
He also ran through the economy’s rate of growth after its decline because of COVID-19, and he predicted a return to what he called real growth late this year or early in 2022.
“We’ve gone back to normal,” he said. “We’re going to see real growth again, which is more than a lot of economies can say.”
The talk also touched on concerns over the federal debt and higher taxes, and the fact that one party now controls both Congress and the White House.
“Both parties run up the deficit, both parties make changes, both parties play with your money and mine in different ways, and we are just going to have to do what we have always done,” he said. “We will adapt; we will overcome; we will continue on; we will stay in business; we will continue to employ people; we will continue to make money for the stakeholders.”
For those registered for BakingTech 2021, Mr. Beaulieu’s talk will be available on the event’s website in the videos on-demand section.