Portable Sanitation Association International

Association Insight, August 5, 2020

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ASSOCIATIONINSIGHT Portable Sanitation Association International News BIWEEKLY EDITION AUGUST 5, 2020 Page 2 Continued on page 4 Economic Outlook, Part I: Navigating through Uncertainty…continued from page 1 Be Aware of Macroeconomic Developments but Pay More Attention to How Those Trends Affect Portable Sanitation in Your Area Last week you undoubtedly heard that the economy, badly battered by COVID-19, shrank at a record annual pace of 32.9 percent in the second quarter. Statistically this represents the deepest recession in American history. This news is not helped by a World Bank report that suggests the current coronavirus-fueled recession could be the worst since World War II worldwide. Considering that more than 60 million people died in WWII and economies from Europe to Asia Pacific had been decimated, it is fair to say that economists around the globe are preparing us for a long haul. Despite the "doom and gloom" in these numbers, large pockets of optimism remain. The market has rebounded and 85 percent of companies report their earnings per share estimates rose by an average of 15 percent. Consumer confidence has dropped some, but people are still spending money, and many portable sanitation companies report their numbers are as good or better than prior years. Only their mix of revenue sources has shifted. In the third quarter the US economy is expected to improve from last week's numbers. However, the surge in coronavirus cases in large swaths of US territory and worry over passage of a new package of government-funded relief may mute the positive effects of a bounce back. Economists polled in mid-to-late July by MarketWatch predict GDP will expand at an 18% annual pace from July to September, though these estimates are likely to be coming down as August continues. Economists and experts agree that the economy won't truly recover until the coronavirus pandemic is contained without triggering another wave of infections when lock down measures are released. Although no one knows when that will be, experts are making educated guesses. The Conference Board, a US- based nonprofit business and research group with members in 60 countries says, "…reaching a full recovery in global GDP to prepandemic levels could take until mid-2021. For mature economies [like the United States] output levels won't recover until the beginning of 2022 at the earliest." The Congressional Budget Office (CBO) has gone so far as to predict that our economic output won't fully recover until 2029 and won't even start until some time next year. There is another bright spot. If you owe money on your business or equipment—or expect to borrow money to expand—interest rates are expected to remain at historic lows. The Fed has already indicated it will keep the federal funds rate (a key short-term interest rate) close to zero through 2022. This is good news for borrowers who need to finance business loans.

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