Dr. Jeff Dietrich from the Institute for Trend Research (who is the economist I most trust with industrial production data and the automation industry) spoke on "Projecting When Business Cycles will Change." Since most of his slides are graphs, I can't reproduce them here. We are living in a world that will be dramatically different in the next twenty years, even more so than in the past twenty. It is no longer "the global economies of the world are..." but rather "the global economy of the world is..." Most of the economies are slowing down. The fastest growing nation in the history of the world is China. "Granted, they borrowed a few ideas here or there..." Bernanke calls it "a more moderate rate of growth" for 2008. Dietrich says that 2008 will continue to show a small rise in growth. It is the second half of 2008 and 2009 and 2010 that concern us. There are some tipping points for this hard landing. Home prices are already in recession. Oil prices are back up. Elections. China is a mitigating factor. Inflation is positive, kept at bay, and interest rates have not been raised since last July. Debt is going to be growing. We are living in sort of a bubble here. It is called the "wealth effect." We are sooner or later going to run out of the equity in our homes. Industrial production has continued to rise, but MCAA bookings have fallen. Both the services and goods sides of the economy have slowed. The next recession is going to be similar to 2001, but longer in lengths...perhaps as much as 17 months in length. Probably about a 5% slump. This prediction is going to be for the US economy... The global economy will be rippled by what happens to us. The other exporting nations will track with us. China will feel the effects as well, since 25% of their exports come here. MCAA trends lead USIP by 5 months through lows. US Composite Leading Indicator has been moving down consistently since September 2004. There is no upside cyclical momentum in this indicator. Yet. 66% of gross domestic product is retail sales excluding automobiles. This trend is also moving slower, due to housing and its downstream neighbors. 3.6% growth in 2007, but it isn't as bad as it will get in the next couple of years. There will be a temporary improvement to 4.3% in 2008, but that will be a "dead cat bounce" and will be shortlived. State and Local Government Expenditures are going up. They will continue to spend even during the coming recession. 2008 is an election year, and it will go up. The stock market still has a lot of life in it, through October or November of this year. The Fed appears to be willing to leave interest rates alone. The next move will be up, not down. Sometime in early 2008, the Fed will raise interest rates because of the inflationary pressures on the economy. What you have today, and the difficulty of finding people, is going to continue until at least the recession kicks in. You are going to have to work on the retention issue for your employees because it is not going to go away soon.