At ABMA’s 2022 Annual Meeting, Jan. 14-17 in Indian Wells, California, Alan Beaulieu, Principal, ITR Economics, provided an economic outlook specific to the boiler industry. Beaulieu covered numerous topics pertinent to all branches of the boiler sector, including infrastructure spending, the upcoming midterm elections, the worker shortage, and more. Here are some snippets from that presentation.

Short-Term Economic Outlook

“The reality is that the economy’s going to grow at a slowing pace in the second half of 2022 and into the first half of 2023. In the first half of 2023, there's going to be one quarter of slight decline in gross domestic product (GDP). Now, this is important for several reasons. One is that the media is going to go nuts. And as things slow down, you're going to see headlines from the New York Times and others stating the economy is falling apart and the end of the world is near. There is no need to abandon all hope just because of one silly quarter with a little bit of decline. Following this, the economy will pick up speed again. You're going to really enjoy the second half of 2023 and 2024 in terms of economic growth.”

Boiler, Heater, and Furnace Market

“The rate of growth for boilers, heaters, and furnaces is going to reach a peak before long. In the second half of 2022, you're going to find decelerating growth in the industry. There's still going to be growth, but that growth will be decelerating.”

National Debt

“Are we headed toward a debt disaster? That's a question that sits heavily on a lot of people's minds, and one of the big questions we get — it’s right up there with labor and inflation. The supply chain is worried about all this government spending? Is it going to turn into a disaster? Oh, yeah.

“When does it occur? Not right away. The government has embarked on modern monetary theory (MMT,) which also stands for magic money tree. The government believes, ‘We can do whatever we want as long as it's within the parameters of GDP growth and inflation. We can do this with impunity for as long as we want, because we're the United States.’ And, the trouble is this very active MMT creates the problems which undermines MMT. They're doing this with a belief that it is not harmful, but it is toxic. And it is part of the Great Depression scenario that’s looming in the 2030s. This feeds right into it. In previous years, I've said government spending was going to be one of the factors that leads to the Great Depression. Well, that remains true. In fact, they’ve recently put it on steroids.”

When Should I Sell My Business?

“The best time to sell your business is 2025. That rings true because there’s a recession coming in 2026. And this will be a notable recession. So, if you want to know when to sell, do it in 2025, and do it with no earn out. Also, make sure you sell it to somebody you don't like.”

Infrastructure Spending 

“Is infrastructure spending going to help you address our monetary concerns? The answer is no.

"If you take the amount of the proposed infrastructure bill, $550 billion, divided by the number of years it will cover, and you compare that number to the size of the U.S. economy, the infrastructure spend on an annual basis is less than one-half of 1% of the size of the economy. So, that's hardly a giant rocket ride. Is it beneficial? Yes. Is it needed desperately? Have you ridden through Pennsylvania lately? This country's a mess when it comes to roads and bridges and infrastructure. In Texas, you know about the electrical infrastructure issues. We’ve got some serious problems in this country. So, it's necessary, but it is not a panacea. It's not going to make everything all better. It’s not going to provide serious help as an industry. Some of you will benefit, but, as an industry, it’s going to be negligible. I'm sorry, if you're holding on to hope that an infrastructure bill will be a great thing for the industry.”

Midterm Elections

“Will the midterm elections change the nation’s debt scenario? For example, If we find that Republicans win in the Senate or one or the other chambers and there is no longer a political deadlock in Congress, will that mean that all this deficit spending goes down, and therefore you can breathe easier? While that’s a reasonable question, the answer is no. Republicans spend just as much as do Democrats. People hold beliefs that their party is better with spending than the others. Brian [Beaulieu] and I are writing our fourth book, which is cleverly called book four, because we don't have a title for it yet. And we've done a deep dive into politics, and what elections mean for GDP, housing, employment, debt, etc. We’ve found that Republicans and Democrats both spend at about the same pace. And, so, if there's a Republican swing, that isn’t going to suddenly eliminate the debt problem; that's just not going to happen? So, go ahead and vote on this year’s midterm election, but understand it makes no difference on debt.”

Climate Concerns

“I get really ticked off when I hear people say how bad we are as a nation. America is among the good guys. We’re heading in the right direction. We have met the parameters of the Paris accord, even though we didn't sign it. Overall, we've done a good job.

“Will all this emphasis on climate change help you? Yeah, it'll help you. Now, you're going to have to adapt and change, meet the societal and cultural pressures that are bestowed upon you, and overcome the regulatory pressures that will be thrust upon you, but, ultimately, climate awareness is going to cause you to become different than what you thought you may have been. This is just part of the process, and your business is going to have to evolve.”


“When it comes to pollution, China is the problem. It’s going to take time and a lot of money for China to fix its problem, which increases the cost of doing business. So, China's got increasing cost pressures, because they need to clean up the environment. And as they aim to clamp down on the environment, there’s going to need to be a shift away from coal, which is how China gets two-thirds of their electricity. Additionally, 30% of our mercury pollution comes from atmospheric drift from China. So, the next time you're eating fish, and you’re thinking of mercury levels, thank China for that.”


“When it comes to electrification, that shift is going to occur a lot slower than politicians are talking about. It's a large problem that has no immediate answer. If you have an electric vehicle, let me ask you a question. What are you going to do with the lithium battery when you're done with it? That's a huge problem that needs to be solved.”

Retail Sales

“Retail sales represents two-thirds of the U.S. economy. Disposable personal income is going down in America because the stimulus checks have dissipated. So, unless there's another round of massive stimulus coming our way, it’s evident that consumers are getting back into a more normal state. We're going to find that things go back to normal. And that means the economy's growth, which has been so robust, is going to slow.”

Stock Market

“I highlighted technology in the past because technology was a good market play. But, now we're warning you that in a slower-growth, high-inflation environment, technology is not a good play. So, if your investments are in technology, be careful. 

“B2B, which is key to the boiler industry, is also slowing down. In 2022, we’re forecasting 6.4% growth. That rate right now is 15%, so it’s going to decrease to less than half the rate of growth that currently exists.” 

Industrial Production

“Regarding industrial production, things are going to be slowing down. But, for now, things are good. We're going to experience record-high levels of industrial production by the time we get into 2023. Most people think we don't manufacture many goods in this country, but America is the No. 2 manufacturing country in the world. Manufacturing is in an awesome place, and you’re going to find that it will continue to be just as amazing.” 

Labor, Supply Chain, and Pricing

“When we look at the relationship between these three components, you can see that they move through highs and lows at the same time. For those of you who are selling into nonresidential markets, those markets will be going up. So, while the B2B and the industrial side of your sales may be slowing down, that nonresidential side of your business is going to be going up, with increases selling into manufacturing, construction, manufacturing, new buildings, etc. Manufacturing is going to be going up, along with commercial construction, industrial construction, etc. You’re going to find more sales on the nonresidential side. It's going to be a great year for nonresidential sales.” 


“You have to continue to invest in yourself. One way to do this is to automate everything you possibly can, from the front office to the back office. If you can’t automate, focus on what you can do to increase your efficiency. When was the last time you spent significant amounts of money on or in your business? If you can't think of a date, then you haven't spent nearly enough lately. Use our company as an example. Four-and-a-half years ago, we hired a guy named Joseph to be our IT department. Now, he's got 12 people working for him because every dollar we spend on IT comes back to us with a very nice ROI. 

“What are you not doing that your clients would appreciate? What are you doing that's costing you money? Regardless if you want to spend the money, you’ve got to spend the money. Find ways that you can move the needle forward.”

Attracting Millennial Talent

“it's not easy to attract people. The job openings in the mechanical industries are through the roof. So, how are you going to attract and retain talent? 

“Let me tell you what millennials want because that's who you want to hire. Millennials want to be paid. If you think you can give them just enough to get by, you're making a mistake. They'll leave as soon as they can. You have to pay them well. They want to do well and have a visible career path. Finally, they want to know that the company they’re working for is having a positive impact on the world and on the community. If your company doesn't have a focus on doing good environmentally, then you're alienating potential employees. They'll go to your website and look for evidence of this. If you’re not helping the environment and community, they’re already not interested. The ones who come in will be the C players and not the A players you actually want.”