The U.S. economy will enjoy solid growth through the
first half of 2010, but growth will slow appreciably in the
second half once inventory levels have been sufficiently
rebuilt and the impact of government stimulus programs
ebbs, one of the world’s leading economists said Jan. 20.
Donald Ratajczak, who today serves as a consulting
economist and for 27 years was director of the Economic
Forecasting Center at Georgia State University, predicted
the economy will show growth of 3. 5 percent and 3. 1 percent, respectively, in the first and second quarters of 2010.
However, Ratajczak sees growth slowing to just 1. 1 percent
in the third quarter and 3. 25 percent in the fourth quarter.
Ratajczak expects brighter days in 2011 as the economy gains a firmer footing and an upcycle boosts buying,
ordering, and shipping. “2011 is when you want to feel
good,” he told the SMC3 winter meeting in Atlanta.
Ratajczak said the economy went through massive
inventory liquidation in 2009 as the financial crisis led to
a sharp drop in orders and businesses that couldn’t
secure short-term financing after credit markets froze
simply dumped their existing stock. In the second and
third quarters alone, U.S. businesses liquidated $305 billion in inventories, he said.
The economy will benefit in the near term as inventories are replenished from currently unsustainable levels,
Ratajczak said. However, that process will run its course
by mid-summer. The economy remains on “life support,”
he said, and will not regain its health until the private
sector begins creating jobs and growth is powered by
wage gains rather than by government stimulus.
Ratajczak noted that industrial capacity declined in
2009 for the first time since the depth of the Great
Depression in 1932. He added that industrial capacity
continues to erode and may not bottom out until the
second half of 2010. In addition, commercial and industrial loans are declining by $20 billion a month, a sign
that lending activity remains weak, he said.
What capital spending does occur will be in equipment
and software, not in facilities such as warehouses, which
Ratajczak said are already in oversupply. Facility values
“have not yet bottomed,” he said.
On the positive side, U.S. companies have boosted
their cash flow by an astounding $250 billion since the
recession took hold, meaning they have significant capital to deploy should they see an economic recovery take
root, Ratajczak said. He also expects a tailwind from
benign oil prices, which will remain low due to a glut of
oil and refining capacity.
“I will not be surprised to see $65-a-barrel oil,” he said.
“I would be surprised to see $85-a-barrel oil.” Oil prices
closed Jan. 20 at $77.62 a barrel. ;
economist says growth will surge,
then slow
accolades
; Excel-ling. Exel, a Deutsche Post DHL company, has
been awarded a 2009 Platts Global Energy Award of
Excellence for its commitment to reducing its carbon
footprint by 30 percent by 2020. Deutsche Post DHL says
it is one of the first logistics companies to set a quantifiable climate protection target.
; High performance. Welch’s has been awarded the
2009 Supply Chain Performance Leadership award by
Ventana Research. The award recognizes the company’s
use of Oco Inc.’s business intelligence solutions to
achieve greater supply chain performance and collaboration in its transportation operations.
; Speed readers. Convergence Systems Ltd. has been
awarded the 2009 Asia Pacific Frost & Sullivan Product
Differentiation Excellence Award for the RFID readers
market. The company was recognized for developing an
RFID handheld reader that offers twice the level of performance provided by many other available handheld
readers.
; Gold for Green. Oil Purification Systems (OPS) has
been awarded the Connecticut Quality Improvement
Award Partnership’s gold-level Innovation Prize. OPS was
recognized for its supplemental filtration Eco-Pur System,
which removes contaminants from lubricating oil, reducing the need for oil changes.
; There when you need ’em. Damco, a logistics and
freight forwarding specialist, was honored with the
Outstanding Partner in Supply Chain Excellence Award
at the SCM Logistics World 2009 conference. The award
recognizes Damco for developing end-to-end supply
chain solutions that help customers improve their business performance.
; Community counts. Murphy Warehouse Co. was
recently honored with the Minnesota Family Business
Award for its longstanding commitment to the community. Murphy Warehouse was recognized for its green practices, work with charities like Toys for Tots, and truckload
donations to local food pantries.
; Software solutions down under. Accellos, a developer of supply chain execution software, has been
named Sage Australia’s 2009 Third Party Developer of
the Year. Accellos was honored for its success extending
the Sage Accpac ERP platform to drive business advantages in companies throughout Australia, New Zealand,
and the Pacific Islands.
