News Column

Borrow Big, Be Aggressive to Ride Economic Upswing

November 1, 2013

Celeste Smith, The Charlotte Observer

economy upswing

Business owners should be borrowing big to expand their companies, hiring more staff, and ditching any lingering fears from the 2008 recession because the economy will be on an upswing to 2017.

Being aggressive now will not only keep businesses ahead of the curve, but also help owners get ready for the next recession -- possibly coming in 2018 or 2019.

That was the advice -- and warning -- from economist Brian Beaulieu, who spoke to about 200 attending Wednesday's Vistage All-City 2013 at Harris Conference Center. Vistage is a worldwide collection of peer advisory groups for CEOs, executives and business owners.

"It's time we shed our hesitancy about the future," said Beaulieu, Vistage's chief economist and CEO of ITR Economics, an economic research and consulting firm which says it has forecast major economic events well in advance, including the last recession.

Beaulieu predicts that while the economy will see some softening in the second half of 2014, "it looks like to us the four-year period is going to be up," he said. "You need to start making more aggressive decisions."

His view is not universally shared. The Federal Reserve, in deciding Wednesday to continue its economic stimulus program, noted the housing market had cooled off, in part due to rising interest rates. There's also uncertainty created by repeated standoffs over the federal budget.

Still, Beaulieu said economic trends are positive. They include upticks in manufacturing, construction and population growth, which will in turn raise property values as more look for a home. The country also is rich in natural resources, and it has surpassed Russia as an oil producer, Beaulieu said.

Some of the things he said businesses should do to prepare include:

--Launching training programs: When Beaulieu asked attendees who was having trouble finding skilled people, many hands shot up. A lack of available skilled people in the workforce means companies should create their own programs so they have trained people in place during times of growth, Beaulieu said.

--Studying competitors: Companies should invest in customer market research to know how to sell themselves to potential customers. Owners also should keep an eye on competitors that try to poach their employees. Find out what will make your people stay so they won't be recruited away, he said.

--Borrowing money: Do it now, while interest rates are low, he said. "Go out and borrow as much money as you can to make your business grow," he said. If you're not, "you're still letting scar tissue of 2008-9 hold you back."

"If you are sleeping through the night," Beaulieu joked, "you have not taken on enough debt."

Beaulieu's ITR Economics forecasts a recession coming in 2018-19, based on several possibilities. They include the chance that a fiscally conservative president takes office in January 2017 and cuts government spending. "You can't actively withdraw government from the economy ... without pain," he said.

Also by that time, Beaulieu said, the Fed may remove the "IV drip" of low-interest rate policies that have helped stimulate the economy by encouraging borrowing and spending.

Vistage International numbers about 14,000 members, according to the group. The Charlotte region has about 150 members.


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Original headline: Economist to Charlotte business owners: Borrow big now for economic upswing coming later

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Source: (c)2013 The Charlotte Observer (Charlotte, N.C.)

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