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Act now to reap tax benefits of expected 2010 recovery

John Kalkowski, Editorial Director -- Packaging Digest, 5/1/2009 2:00:00 AM

It's said that the darkest hour comes just before the dawn. Well, things have been pretty dark lately due to the current recession. Does that mean it's just about time for the dawn to break and recovery to rise? A recovery will happen. We all know it will. It's just that we hope it happens soon.



When economist Alan Beaulieu of the Institute for Trend Research recently addressed the Executive Leadership Conference of the Packaging Machinery Mfr.'s Institute (PMMI), he admitted that “the economy isn't necessarily going to be our friend for awhile.” This is the “Great Recession” we are living in, Beaulieu says, but it was never going to be the Great Depression. “It certainly will go down in history as the Great Recession—the worst downturn we've seen in a generation.”

Nonetheless, after leading his audience through a number of gloomy charts measuring the pulse of our fragile economy, Beaulieu predicted that 2009 is probably going to remain ugly for the economy. We are likely to begin seeing budding signs of a mild recovery by the fourth quarter of 2009, and 2010 will look better but not great. However, he says, the economy won't reach the peaks we saw before the recession began until at least 2013.

Beaulieu claims several indices bear watching, as they have proven histories as good, advance indicators of an economic recovery. These include new orders for nondefense capital goods, the inventory-to-orders ratio, corporate bond prices, the Purchasing Managers Index, the Conference Board's U.S. Leading Indicators and, of course, the stock market.

Meanwhile, he says, prepare yourself to reap the benefits of the turnaround by taking the following measures now:

  • Prepare training programs.

  • Negotiate union contracts now, if possible.

  • Develop advertising and marketing programs.

  • Enter or re-negotiate long-term leases.

  • Look for additional vendors.

  • Consider capital expenditures in light of market potential.

  • Use pessimism to your advantage when making acquisitions.

  • Lead with optimism and a “can-do” attitude to help people overcome their fears.

All this is easy for an economist to say, but there is a great deal of common sense in Beaulieu's suggestions. There are opportunities in all economic cycles if you recognize them early and act quickly.

So, are you prepared?

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