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.
