Looking Good
The Economy Is Up & We're Now in a Global Market

In this issue, we present our annual contractor opinion survey, and by most indicators,

things are looking good for 2018.  The economy is not only thriving in the West, but

the rest of the country as well.  If you’ve been in this business for any length of time,

you know that the economy runs in cycles.  The construction industry may be on the

upswing now, but inevitably, one of these days, it will take a downturn.  We don’t like

to talk about it, but every seven to ten years the industry will find a peak, and then a valley.

Being a survivor means that you understand the cycles, know when to be aggressive, make major purchases and investments in your business, and when to be a little more on the conservative side and ride out the storm.  You understand it, every successful business in every industry understands it, and investors understand it.  You work, you plan, and you squirrel away a few nuts for the winter.

It always amazes me that even though we live in a country based on capitalism, and these cycles are inevitable, politicians either don't or won't acknowledge that these cycles exist.  When the economy is good, our political leaders will beat their chests and take the credit.  When it’s bad, they immediately blame the economy on the failed policies of their predecessors.  At times, I’m not sure if our political leaders are stupid or if they believe that the general public is stupid.  I’m beginning to believe it’s the latter.  Maybe it’s both.

It’s similar to a ship's captain taking the credit for a smooth ocean voyage.  Sure, he can alter his course to some degree to temper the effects of a major storm, but there’s a limit to what he can do.  If there’s going to be rough sailing ahead, the captain can only do so much to soften the blow.  He can’t control the weather.

Of course, adjustments can be made that will help push the economy in one direction or the other.  Tax breaks, tax credits, subsidies, and public projects may help grow the economy.  Conversely, an increase in taxes or a rise in the prime-lending rate will slow the economic growth rate.  When inflation and growth rate rise too quickly, like it or not, an effort by the government to slow the economy is the smart thing to do.  Nobody wants runaway inflation.

Today, we are operating in a different market than we were just a few decades ago.  The same economic strategies employed by our politicians don’t always work in the new world order.  Most large companies are global in nature.  They have factories, and a good portion of their sales are now outside the United States borders.  The same holds true for banks and lending institutions.  If the economy goes south in Europe or Asia, it will definitely have an affect on the United States market.  We are no longer living in an isolated economy, and thus, we no longer have as much control of our economic future as we once did.  I’m not being pessimistic, just pragmatic.

Right now the United States has a love-hate relationship with China.  It’s an emerging market and responsible for the profits of a good portion of the Fortune 500.  It’s also a huge headache for United States companies as their government regulates how much market they allow foreign companies to acquire, and at the same time they turn a blind eye to blatant copyright infringements.  All this, in turn, drives our stock market up and down, as well as investments in domestic projects.  If the Chinese market were to take a nosedive, it would have a ripple effect worldwide.

So, our economic picture is looking rosy for now and the foreseeable future.  Make hay while the sun shines.  Take advantage of it now.  But don’t forget to prepare for those winter months ahead.

Marc Dodson