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Chris Kuehl, Economic Analyst, Fabricators & Manufacturers Association, and Managing Director, Armada Corporate Intelligence
 

Chris Kuehl, Economic Analyst, Fabricators & Manufacturers Association, and Managing Director, Armada Corporate Intelligence

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Surviving the Recession of 08-09 (It WILL End but the Recovery Will Present Its Own Challenges)

Surviving the Recession of 08-09 (It WILL End but the Recovery Will Present Its Own Challenges)

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    Chris Kuehl, Economic Analyst, Fabricators & Manufacturers Association, and Managing Director, Armada Corporate Intelligence Chris Kuehl, Economic Analyst, Fabricators & Manufacturers Association, and Managing Director, Armada Corporate Intelligence Presentation Transcript

    • Surviving the Recession of 08-09 It WILL End but the Recovery Will Present Its Own Challenges Chris Kuehl Economic Analyst Fabricators and Manufacturers Association Managing Director Armada Corporate Intelligence
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    • The Recession of 2008-2009 is OVER!!
      • Stock market has gained 30% since March
      • CMI has been up for three straight months
      • PMI has started to trend upward (but is still under 50)
      • Banks have survived the “stress tests” and Libor rates are back down to traditional levels
      • France and Italy have seen indicators trend back up – so has the UK
      • China is back in growth mode and so is India
      • Investors pouring more money into emerging markets than anytime in past twenty years
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    • OK – So It’s Not Exactly Time to Pop the Corks
      • Unemployment has moved above 9%
      • Industrial production is roughly 40% below where it was last year
      • GDP growth is anemic and still negative in some nations
      • Credit markets have improved but are still cautious
      • Deficit spending is pushing many nations to the brink and many will have a hard time reducing it
      • Inflation is the next big challenge and it will require moves that will slow recovery
    • How Bad Was This Last Recession?
      • Comparable to recessions in the last three decades – not necessarily the worst but some unique issues
      • Fundamentally a bank led crisis and one that will not end without a bank recovery
      • Worst quarters were in 2008 Q4 and 2009 Q1 – more hope for Q3 and Q4
      • Factors that play into global recovery – consumer attitude, banks, foreign trade, stimulus plans and the threat of inflation
      • Asia as a major force for recovery
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    • Stimulus - China vs. US
      • $780 billion vs. $600 billion
      • US version – divided into three unconnected plans – stimulus, recession relief and tax modification
      • Chinese version – highly targeted on job building and economic growth
      • US version – slow to evolve – highly regulated environment
      • Chinese version – very quick to implement – little concern for details – just get something going to create jobs
      • No more than 3% allocated thus for infrastructure in US as opposed to 60% in China
    • Banks, Capital Markets and Bail Outs
      • Some movement in the capital markets – Libor is close to normal again, most seem to have survived the “stress test”
      • Desire to nationalize has faded but intervention is significant – regional banks fared better than most but FDIC worries them
      • Why the banks got in such trouble – equal measures greed and stupidity and the law of unintended consequences
      • What happens with the automotive sector – Fiat comes back to US, GM shrinks, Ford gloats and the new auto sector is in the south and has Asian roots
    • Five Things to Keep You Awake at Night
      • Global recession affecting Europe and Asia differently
      • Interest rate policy – when do they go back up?
      • The return of the oil and commodities bubbles
      • The recession expanding beyond this year
      • The recession ending soon while providing something else to worry about - inflation
    • Coming Out of a Recession
      • The first few months of a recovery are often the most threatening in the whole recessionary period.
        • Competition is prepared to exploit any weaknesses.
        • Ammunition to respond to these threats is in short supply – especially this time given the problems with finance.
        • Consumers are highly demanding if they have money to spend – other consumers are moribund
        • Precise knowledge of the recovery period is not available – how fast and how soon are the major questions.
        • Policy shifts by the government can provide help or it can deal a death blow – depending on who the policies are designed to assist
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    • Contact Information – ckuehl@armadaci.com
      • For more information on all this excitement please request
      • Business Intelligence Briefs ‘
      • Daily e-mailed briefs on economic and business issues of interest