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May 12, 2021

Economist Predicts Bright Future For Promo

Alan Beaulieu offered the assessment – and other insights – in a webinar hosted by Gemline.

By  John Corrigan

The immediate future of the promotional products industry is bright and promising.

That was the underlying theme of Top 40 supplier Gemline’s (asi/56070) free webinar with economist Alan Beaulieu on Tuesday, May 11. Beaulieu, president and principal of ITR Economics, provided a roadmap of where the economy and the promo market may go as the United States recovers from the COVID-19 pandemic.

Alan Beaulieu

Alan Beaulieu president and principal of ITR Economics

Fueled by the massive $1.9 trillion pandemic relief package, the reopening of nonessential businesses and mass vaccinations, economic growth is expected to skyrocket this year. Beaulieu’s optimism stems from other key indicators, such as retail sales and anticipated job creation. “You can believe in tomorrow,” Beaulieu says. “People having money powers the economy. Businesses are spending that money on advertising once again.”

Another positive is the resurgence of traveling throughout the country. Both leisure and business trips are trending upward, as are hotel bookings. More people willing to fly means more trade shows, conferences and events – the lifeblood of the promo industry. “International travel will also resume to some version of this thing called normal,” Beaulieu said.

Analyzing President Joe Biden’s economic strategy, Beaulieu honed in on the proposed 10% surtax on imports from offshore business activity, as well as the 10% “Made in America” tax credit to incentivize onshoring. That’s all in addition to the tariffs implemented during the Trump administration, which Beaulieu anticipates will remain intact for the foreseeable future. With the North American promo industry sourcing the majority of promo products from Chinese manufacturers, now is the time to reconsider your supply chain.

“If you’re a U.S. firm and you’re bringing it in, Biden wants you to pay an extra tax,” Beaulieu says. “Biden has shown he’s a nationalist rather than a universalist.”

On a related note, U.S. manufacturing is on the rise. The Institute for Supply Management (ISM) reported that its index of national factory activity jumped to its highest level in more than 37 years in March. The growth rate slowed in April, but the sector still expanded. “All those folks who think manufacturing has left the country are wrong,” Beaulieu says. “Toys, textiles, furniture – we’re making things here we thought were gone forever.”

Interest rates are expected to remain low this year, next year and the year after, according to the Federal Open Market Committee’s projections. As a result, Beaulieu suggests that companies make acquisitions, innovate their product line and invest in their processes and marketing efforts. “Borrow money and buy something that will make you more efficient,” Beaulieu says. “You should be very aggressive right now in spending on yourself and your company.”

Considering the current labor shortage, automation may end up being the wisest investment. Businesses across the board, including in the promo industry, are reporting hiring challenges because potential workers reportedly fear contracting COVID-19, lack childcare options, and/or don’t have the skills needed for open positions

And then there’s the additional $300 in unemployment insurance that unemployed people are receiving through the federal government each week. “When you’re in competition with the federal government, the private sector must pay what we consider to be truly outrageous wages,” Beaulieu says. “We’ll all be raising prices, and if that happens, then we’ll have inflation.”

With 2019 promotional products revenue of $105 million, Gemline ranks 13th on Counselor’s most recent list of the largest suppliers in the industry. The new list comes out in July 2021.