Financial Preparations for the Future

Episode with guest: Alan Beaulieu

Principal at ITR Economics

(This episode was recorded in September of 2021.)

Key Episode Take-Aways:

1. In an inflationary environment where raised prices are regular, businesses must maintain margins and be as efficient as possible. (click to jump to this topic below)  The other thing that you need to do in an inflationary environment, and you've had to do it in the last 15 years, but it becomes a matter of maintaining your margin, even more. So going forward is you have to be as efficient as you possibly can, because labor costs going to keep going up as part of the inflation equation. And if labor is going to eat away at your EBITDA, you have a real problem.

2. Even though the return is less, getting into markets that tend to do well no matter what will help weather financial difficulties. (click to jump to this topic below)  And it is a good time to go defensive, I tell that to everybody, that will mean different things for different people, but I am not in any way saying go to cash as a taxable trigger when you do that. So, when you have no need to go to cash and putting them under your mattress or anything like that, we're not talking about we're just talking to corrections coming according to the optimizer and model. And just time to think about those segments, the economy, they tend to do well no matter what. And that's where you say, all right, the return is less, but it's pretty protected.

3. You should consider the US if you want to eliminate your supply chain risks in the future, where the cost basis is competitive. (click to jump to this topic below) And if we have a cost basis of 100, China's is 95 to 97, but with the increased supply chain risk, you have to wonder if it's worth that slight difference in cost. We are more expensive than Mexico. But there's an even larger supply chain risk there according to a lot of sources. And when they compare to Vietnam, it's a lot cheaper in Vietnam, but boy, there's a lot more risk. So, if you want to eliminate your risks, you should be centered on the United States where the cost basis is really globally competitive, we're much better than a lot of nations and not as much as some others.

Continue scrolling to read the full episode transcription.

Announcer 0:00

Welcome to the "Change the Game" Podcast, where we share stories of open book management and highlight capitalism at its best. Thank you for tuning in to this episode of the "Change the Game" Podcast with special guest, Alan Beaulieu. Alan talks to Steve and Rich about how surviving the war on talent means having a sticky culture, why we are seeing an inflation that is heading to a recession, followed by a depression, and how you can move your allocations to inflation adjusted assets to weather the storm. Here's your hosts, Rich Armstrong and Steve Baker.

Steve Baker 0:35

Welcome to the "Change the Game" Podcast where we are Changing the Game by doing business differently. And we're highlighting stories of capitalism at its best. I'm Steve Baker, and with me, as always, is Rich Armstrong, president of the Great Game of Business, and co-author of our new book Get in the Game. Hello, Rich. How are you today?

Rich Armstrong 0:54

I'm very good. Steve, how are you?

Steve Baker 0:57

Well, I'm awesome. Man. We just came out of our 29th annual conference. And our special guest today is really exciting to me. It's Alan Beaulieu. He's the principal of ITR economics. And he's the president there as well. Since 1990, Alan's been consulting with companies, including SRC throughout North America, Europe, and Asia on how to forecast and plan to increase profits based on business cycle trend analysis. Basically, what I'm trying to say here is this guy knows his stuff. Alan has authored three books with his brother, Brian, "Make Your Move". "But I Want It", which is a great title. And his latest book from 2014 is "Prosperity in the Age of Decline", a must read for everyone that listens to our podcast. Alan's an accomplished speaker, obviously, I just dynamite at our conference this year. And he also has, of course, through ITR webinars and different newsletters and reports that help business owners and executives capitalize on the trends happening in the economy. He has been called the country's most informed economist, I will concede that he's New Hampshire's funniest economist, Alan Beaulieu. Welcome to the podcast, how are you man?

Alan Beaulieu 2:16

I'm fine, Steve. Hello, Rich. It's great to be here with you. Folks, I got to tell you a quick story. Before we get into economic things. I was just doing a presentation with a really good group of people. And we're talking about labor problems. And I said, well, you got to engage your labor force. And it really helps if you share information. And there were about 30 people in the room. And I think 25 of them just sat back.

Rich Armstrong 2:42

Been there.

Steve Baker 2:45

It's a terrible idea.

Alan Beaulieu 2:48

And you could just see it on their faces, this had not occurred to them. So obviously, it gave me time to talk about the Great Game of Business and everything that you do and the importance of it, and that we follow it. And the difference. It's made in our firm. You know, scientists said I spread the word, but we're disciples of it. And the differences it makes, but and they so they one guy looked up and he says, so what's the number? The first number you should share. Is that revenue, I said, that's a good place to start. I said in start there, I said, and then just you don't want to do it all at once. Because, you know, they'll not know what's wrong with you, but you just slowly ease out there. I said all sudden, you find that there's people who are engaged and people who say this matters. And it was just fun. I thought of you guys immediately.

Steve Baker 3:35

I love it. I love it. Now, you know what it's like to teach Great Game of Business, Alan, because that's the face that we see every time we go out.

Rich Armstrong 3:46

Exactly, yeah,

Alan Beaulieu 3:47

That's a great thing, though. fantastic thing. So, I digress. But I want to tip my hat to you and let you know that I'm out there for you.

Steve Baker 3:56

Well, thanks for evangelizing me. And so, for our listeners, who haven't been able to experience your keynote at our 29th annual conference, I just wanted to maybe if we could touch on the high points, and then we'll delve into some of them and deeper questions. But you kind of brought the big picture for our audience. And I love how you research, you know, companies and audiences before you go speak to them. And you had examples of construction and manufacturing and service and different things like this. But the big picture was that while your book from 2014, prosperity in the age of decline, and your keynotes and talks and webinars talk about a 2030 depression, it isn't all doom and gloom. And I like the way you talk about that because, can you talk about that big picture for a minute just to set the tone for our conversation.

Alan Beaulieu 4:47

Sure, I'd be happy to, and I like the way that you frame that. When you know something's going to happen, whether it's something it's going to stretch your resources because of the demand is going to be on your business or that's going to stretch you because of the lack of demand on your business, you prepare for it. And when you truly prepare, well, either one of those becomes an opportunity. And it's the not knowing that hurts, it's falling down the stairs, because he didn't see the stairs, that hurts no matter what. But if he knows some stairs coming, you grab the rail and just plain for the dissent, and you get down there safely. It's as simple as that. And that's my job. That's what we do all of us here at ITR. And so, things are neither good nor bad. They're just kind of up and down. And are you ready for it? And so, with some inflation coming later this decade with some higher interest rates later this decade, you know, how do you get ready for and are you ready for it? And I think we did talk at that meeting. You and I and I think Richard touched on it, when you were talking those changes has to happen, there is no such thing as I'm not going to change because if the phrase I like and we shared was, if you don't like change, you're really not going to like extinction. And things are becoming the firm's that adjust that change that realize what's coming, they win. And that's a happiness to me. There's no zombie apocalypse out there, there's just get ready for the changes. Pretty simple.

Steve Baker 6:11

Like that is bringing it right down to the common man like me, if you tell me there's not a zombie apocalypse, that's arcade checks one right off of the list there. Okay. All right, next. When we, when we talk about this, you know, Dave Ramsey, the personal finance guru. I've been a fan of him for a long time. And he used to the one thing that humbled me the most was when I first read one of his books, and he said, you know, what is your deal people because you know, Christmas is coming every year. And yet every Christmas, you end up charging your card up, right. And the whole point is, you know, it's coming, you'll know you'll have a flat tire, you know, you'll have this, you're just taking this to a whole new level. And so, as business leaders, we need to be ready to move. So, in brief, could you go ahead and just set us up with what are the big things in the next few years, I think he said we were going to continue to rise as an economy through 2022. Take us there for just the next few years.

Alan Beaulieu 7:05

Sure, happy to We are the economy is going to expand manufacturing GDP services, we're going to continue to go up in 22 and 23, and 24. The thing to note is that the rate of rise is going to change. So, if you grew by 20%, in 21, you're not going to likely grow by 20% and 22, if you're correlated to the economy, because the economy is not going to give you the same opportunity. So, you plan your budgets for a lesser rate of growth. And in this example, we'll say 10%, much different resource allocation and plans. When you go from 20% to 10%. growth, still, growth is still fun, but to allocate properly. And then in 23, I would encourage most people that are positively correlated, you're going to slow down a little more before it picks up speed and 24. And once you map that out, you know you're going to be profitable. It's a question of how many we all need people problems now, but how much inventory how much what's the Salesforce going to do? What are the expectations, but the material needs, transportation needs a whole shooting match comes into sharper focus, when you have the right metrics for growth? And through the near term, that's pretty simple. We're not going to see interest rate rise in 21. Federal government, the Federal Reserve Board, excuse me, has said so and they're not going to reverse trend now. And in 23-22, some of them have said some of them being some fed governors have said, a little interest rate rises and 22, I agree with them, they will be doing that. And more upset interest rate rises and 23. And I think that's exactly what they're going to have to do is bring it up 100 basis points, or maybe a little more. But that's not enough to shake up the world. And it's not enough to rock anybody's boat unless you're so highly leveraged, that that little bit of rise is really going to take the cash out of your business and leave you with no fuel in the engine. So, it's just something to plan on something to know. But what it triggers, and I hope everybody's thinking is that that little bit interest rate rise is not done in a vacuum because they're seeing some inflation coming. And it consistently above 2% because that's the Federal Reserve board's guideline now consistently above 2%. So, they're telling us a mean beginning later in 22, definitely in 23 and beyond, we think it was going to be above 2% inflation, and that's where we all need to be focusing our attention. How do I manage my business not in this spiking commodity costs of 21 but in a more consistent inflationary environment? Because while Rich Steve and I have gone through all this and you know, this is not a new thought to a lot of folks, it's like I've only lived in disinflation and deflation. I have no idea what life and inflation is like. And it can sound scary, because it's like, oh, we should avoid inflation at all costs of deflation hurts more than inflation. FYI and inflation is your friend for a long time if you plan for. So, talk to the older person, listen to the stories, learn what you can and put up with the stories, learn what you can. And you'll have some really good ideas as to how to maximize the future.

Rich Armstrong 10:13

Yeah, well, Alan, yeah. Alan, you mentioned that in the conference, which I thought was so great. He said, your suggestion for the younger folks was to listen to the stories of the older generation that have already dealt with these ideas. But specifically, as we're here as the old guys representing and there's a lot of people in our audience that are young, what are some of the things that they can do to prepare for that? What are some of those lessons learned we could share with the audience about dealing with inflation in an upcoming recession?

Alan Beaulieu 10:45

Sure. One, is a change of mindset. We live through the last 15 years, except for 2021, where we are hesitant to raise prices. Because we thought the marketplace would react negatively to it, we had to really trumpet our competitive advantages. In an inflationary environment, everybody's going to be raising prices. And so, it becomes a much easier thing to do, you're not doing it the once a year hoping you get away with it, you're regularly raising prices in the years to come and nobody's going to bat an eye, it's going to be as normal as breathing.

1. In an inflationary environment where raised prices are regular, businesses must maintain margins and be as efficient as possible.

The other thing that you need to do in an inflationary environment, and you've had to do it in the last 15 years, but it becomes a matter of maintaining your margin, even more. So going forward is you have to be as efficient as you possibly can, because labor costs going to keep going up as part of the inflation equation. And if labor is going to eat away at your EBITDA, you have a real problem. So, you have to be thinking now, how do I control the headcount? How do I get the labor productivity up capital intensity, and you have some time to do it, but you can't let it go? It's not an option as we go forward. And the third thing you have to ask yourself, in my opinion, is, what are inflation adjusted assets? Well, Real Estate's a nice inflation adjusted asset. And you could do it in rates if you don't actually own real estate. And there are some segments of the market that do well, in inflation, you can talk to your financial advisor about that. But you just start shifting your investment focus and your asset allocation focus to What does well in inflation, it's not going to be a hedge of any kind, it will be the reality. So, you do those things. It's like, oh, I like this. And you will write until the moment when it all bursts. And he gets sprayed by all the fallout.

Steve Baker 12:31

Well, you mentioned talent, or people and labor. And Jack, of course, has been talking about that for years, the war for talent, it's been around. And I think that people like jack and you, Alan, you see these things so far ahead. You preach him, you talk about him, you teach him, and nobody listens until it's there, right? Just like what we're talking about with inflation and a depression. So, let's talk about that as the elephant in the room. What advice do you have for business leaders when it comes to the labor shortage, not just now, but in the next few years?

Alan Beaulieu 13:06

You're right, and it goes back to that you have to change, and I'll get I'll use Brian and eyes as an example. My twin brother and I are the two principals here at ITR. We started there were three of us when I came on board. And today there were over 60, I think it's about 62 somewhere. And along the way, we had to learn to change, we had to learn that the way that we went to 30 people is much different than the way you go to 50. And then it changes after that you have to change, and you have to focus on culture, within the context of your time within the context of the size of your business. And the people you're trying to attract. You have to discipline yourself to think culture every day, and work on that culture. That's not where a lot of people are right now. They still think I just got to put up, but I'll design, and I'll hire people and I've hired them in the past at 12. So now I got to pay 15 and that's the end of it. For we're in the middle of the great resignation wave. I'm sure Jack is well aware this new are too but okay, somebody's listening. The resignations are absolutely incredible as they go to other jobs because there's no stickiness where they are. And if you're only offering a wage, there's zero stickiness. You have to offer culture. And that's a whole separate podcast. That's a whole separate discussion that you can see. Talent trust, you can see Insperity I don't know how much you folks offer in the way of culture discussions with folks, but it is about the culture and recognizing that you are not a millennial Millennials are not you. Gen Xers are the glue in between. I mean, you got to have everything lined up that way so that you can make it all work. You're a boomer like me. You got to start thinking like a Gen X or a millennial or else folks are just going to call you Boomer and they don't mean it as a compliment.

Steve Baker 14:56

They don't? Damn it!

Rich Armstrong 15:02

Well, you know, it's interesting you say that Alan about, you know, what you asked, I don't know if there's some culture things that you guys provide. But going back to the story you told at the beginning of using, you know, sharing, starting to share and open up to your employees and how you could use that as an engagement measure. And I think that's one thing that a lot of entrepreneurs or business owners don't make a connection to, how engaging it is for employees, just to know what's going on in the business, and how they can contribute to that, and how important that how sticky that can actually be. 

Alan Beaulieu 15:40

Yeah, shows you trust them, it also gives them a voice, because they can express their opinion on the numbers. And they can see that they're working hard changes the numbers that are so important, everybody, so I mean, now you have people engaged, and the other big thing that employees, they are employees, but we tend to talk in terms of team here like is to know that you're doing something good in the community, they want to work for a firm that is making a difference in this world and your business, you make a difference every day. If you're making springs to go into an automobile, you wonder how I am making a difference every day. And your firm has to have that outlet for people to be proud of where they work and to say, you know, we're making a difference in this community we're providing to the food bank or to the vets or to wherever it happens to be. And that's a key component. And I think we grew up I grew up in an age where you didn't need to get socially engaged as a business, you were a business these days, you need to be if you're going to attract labor. And if you, do it well enough, he starts feeling pretty darn good about it all. kind of goes hand in hand.

Rich Armstrong 16:48

Yeah, exactly.

Steve Baker 16:51

So, I want to shift gears a little bit. I love that the discussion about the culture side of things. And I think that that's really, really valuable. Do you have kind of an eye on when the labor weirdness that's going on right now, will flip? Because we know it will. But I don't know if I heard in your talk at the conference. We're in our conversation now about what we're a bounce between now and 2030. Will that flip happen?

Alan Beaulieu 17:22

Well, flip sounds permanent.

Steve Baker 17:24

It does, doesn't it.

Alan Beaulieu 17:25

I'm going to answer that differently, Stephen, that in 2026, we think there'll be a significant recession in the United States, which means it'll be in Canada and Mexico and some different countries as well. And that will change the labor situation for that year. And there'll be in some firms will have to lay off people, they won't have any choice and smaller firms will, should do everything they can to hang on to their key talent. And we'll do the usual A, B and C players and all the rest of that and there'll be some of that, then 27, 28, 29, go back to some difficulties hiring labor, the big switch, the big flip is in the 2030s, because of a 25% 20% unemployment, then all of a sudden, you don't have the same issues that you had before. Remember, the 1970s, Texas had their big oil meltdown. And the joke in Texas became in Janet probably remember this, you know, what do you call an oil geologist? And the answer at that time was waiter.

Steve Baker 18:28

Yeah, I got that. Yeah, no, thank you for pointing that out. Because I think that it's very easy for me anyway, to be polar, that it's all or nothing, that it's this way or that way. And you've taught me something, you know, throughout our relationship, but also in this conversation, and that is things change, and they keep changing. So even the depression, you mentioned in your book that I think you said something like probably five or six years, somewhere in there, and then you'll see a turn. So, it's not like a forever thing. It's not the apocalypse, it is economic reality. And not take, you know, while I'm on the subject of the book, I did have this is sort of a personal question. I'm curious. In prosperity in the age of decline, you've listed a number of different funds that that you all recommended, and I'm curious between 2014 and today, and they were I'm not going to get specific here, but invest in Mexico, water, healthcare, food, entertainment, all that makes sense, because those are things that other than Mexico, water, healthcare, entertainment, food, these are things we're all going to need depression or not. But in the last few years, have you tracked the performance of those funds by chance? I'm just curious.

Alan Beaulieu 19:44

No, I have not because funds change so much through time in 2014 was a long time ago. And as you know from the conference, and in our conversations, we now have developed the ITR optimizer Which looks at everything looks at the stock market and ETFs and stocks in an entirely different way and uses leading indicators that are proprietary to ITR uses our methodology that allows us to forecast the economy so successfully. And it tells us now it's time to go defensive. And the optimizer itself says which things to get into that are defensive. And other times the signals will be it's time to go cyclical. And it'll say, these are the areas to emphasize. And it'll weight it. And so, it's a process, it's something that we've partnered with bellwether wealth about and involves AI as well as ITR, the basis ITR. And what we do and on top of that, there's a B model that uses strictly AI on top of us, really, really impressive stuff. So, the answer is no, I haven't looked and the answer to what should you be an insert calls will shift depending on what's going on in the economy. That's part of the beauty of the optimizer in the AI is that it picks up on the nuances and says, you know what, this hasn't been performing so well, even though it should. So, let's forget that company, or that ETF. And let's go over here and see how it's doing me, and the AI does that obviously a million times in a minute and comes up with some wonderful answers for you. Let's do a quick turn. The optimizer is not meant for get rich quick, folks, this is meant for folks that are going to be patient because most years you'll have an alpha above the S&P. But there are no guarantees in life. And certainly, some months you won't have the alpha, the S&P. But since its inception, it has performed extremely well. And the SEC doesn't let me talk about how far and what kind of testing has gone through FactSet and Morningstar. Probably most importantly, it's made me extremely happy. And outside of real estate, all my other investments are in our ATR optimizer, I can't say more than that, I suppose that I trusted with.

Steve Baker 22:01

That's a great endorsement. And I think because that I just wanted to know, sectors and you know, large things. You know, I remember he talked about funeral homes and nursing facilities. And all that makes sense. It's, I think, sometimes people would want very specific advice. And that's not what we're here to do. At the end of the podcast, though, what we will do is we'll ask you to tell him how to find out more about the ITR. optimizer? Because I think that's something that, you know, there's two different things that we're looking at here is people want to know, what do I do with my business? And what do I do with my personal assets as well. So those are the things that I was trying to get out there.

2. Even though the return is less, getting into markets that tend to do well no matter what will help weather financial difficulties.

Alan Beaulieu 22:38

And it is a good time to go defensive, I tell that to everybody, that will mean different things for different people, but I am not in any way saying go to cash as a taxable trigger when you do that. So, when you have no need to go to cash and putting them under your mattress or anything like that, we're not talking about we're just talking to corrections coming according to the optimizer and model. And just time to think about those segments, the economy, they tend to do well no matter what. And that's where you say, all right, the return is less, but it's pretty protected. And all of us that have been investing over the years know that when I say that we should have come to mind is like utilities, and some health care and different things that just the day in day out not exciting. And musically, we'd say it was a B flat, but stainable note, it's just where you want to.

Rich Armstrong 23:25

Well, Alan, you one thing you mentioned at the conference, as well as how much noise is out there, you get so much information and what you know, what's the right thing to be listening to? And to be cautious about what caution about what you read? I'm curious, you mentioned optimizers, or some other trusted sources that you could share that say, look, I feel like these are solid sources of information.

Alan Beaulieu 23:51

No, well I read lots of sources of information, I want to give you the short answer. But so, what I do, and anybody can do. Well, everybody's got to bias. That's the problem, right? And we're math driven. We're not we don't have that bias. But I'll read the Wall Street Journal, and I will read Bloomberg and I will read New York Times and you know other things at Apple news and, and synthesize it and knowing what their biases, it's not that hard to do. And then I will do my own independent reading online. And I will look for sources that I that I trust more than others. Anybody that's clearly liberal, I take with a grain of salt, anybody that's clearly real conservative, I take with a grain of salt. And I tried to just find a place where what makes sense, and what are the numbers support. So, it's not easy. It's not one source. And it's not three things that I could list off. Unfortunately, it takes a fair amount of time and effort to do. But at the end of the day, we come down to train lines, as you know, and it comes down to math which is entirely agnostic to politics into philosophies and points of view. And that's what drives us as we go through life. Because that we can have what's going on with taxes, I have to know what's going on with redistribution of wealth. I have to know all that stuff. But what's going to happen in your business in the next six months? next year? I got that because that's a numbers thing.

Rich Armstrong 25:13

Well, that's the beauty of ITR you do all that betting and it's based on numbers, we'll just use you as a trusted source.

Alan Beaulieu 25:20

There you go. I like that. Thanks. A ton on our website. There are subscriptions, obviously, but there's a lot of free content there too, because that's part of our give back. We think it's important that businesses have access to dependable information. So, lots of blogs and trends talk, which are blogs and things like that can be had there.

Rich Armstrong 25:41

Very good.

Steve Baker 25:42

We subscribe at SRC, the SRC companies do and many of the Great Game companies that have learned about you do as well. But for those who were yet uninitiated, one of the things that that you've talked about a lot is, you know, what about the dollar? You know, how does the US stack up against other countries other currencies? What does it look like, between say now and 2030?

Alan Beaulieu 26:13

Well, it's going to change that might as easy because everything changes. And the dollar is likely to weaken as we go forward, in large part because the federal deficit is being increased so quickly. And by so much, I showed that chart whereas the deficit increase, it's not just time, this time around, but to two decades, the dollar weakens. And when the deficit goes to be less, and that line goes up, the dollar strengthens, while we're clearly in a free for all spending. And it's not just this administration, it's been going on for a while, and the dollar is going to weaken as it goes through the future, which breeds inflation, which breeds higher interest rates as we go forward. So, as it weakens, it just means you have to say does that impact me, if all my businesses wrapped up in Toledo, Ohio, and I'm buying domestically, you know, paying everything domestically, that's really the only thing you need knows that inflation is coming? If I'm a multinational, all of a sudden, it changes a lot of things. I just started figuring out which currency to be in and all the rest of that, from the early part of your question, which by the way, I think I caught four questions in there, Steve. So, I have

Steve Baker 27:24

I'm going for bulk baby.

Alan Beaulieu 27:30

The dollar is still the major reserve currency of the world, but not the only but we're the most trusted. And the risk is that someday, we're not. And one of the reasons that could be is because the world doesn't trust us anymore. So, if we do things where the world doesn't trust us, then that weakens the dollar even faster, and exacerbates all the problems that we're talking about. So, you watch the bond market, the bond market religion, no. Now, the other way to answer that question, I'm sorry, it's a long answer. But it's a really fascinating question. What's the dollar going to look like? It's not going to look like what's in your wallet. You can pretty much bet on a digitized currency down the road, not cryptocurrency, my friends, that's a much different thing than a digital currency. And what helped me get my mind wrapped around it was this, I remember when I was cash, only then this thing called a debit card came out, it was like, oh, you know, this is like magic, I can just put my card in there, get cash out, I could put my card in and buy things, this is really cool. And then we adapted that really quickly and don't carry much cash anymore. cryptocurrency means we don't need that plastic card anymore. Either. Just hold up your phone, or you do whatever it is. And the government is still controlling monetary policy, they're still tracking it and still making sure that things are moving as they should the way that they want them to. But it's much faster, cleaner easier. And we'll all adjust to that pretty fast. I think that's the future of the dollar. Also.

Rich Armstrong 29:01

Something at the conference that you mentioned, that was a bit of an eye opener for me, I guess is where you actually compared to countries and you know, just trying to get people understand that the US compared to other countries in the strength of the economy is not as bad as in not currently and in the future as some other countries. And could you talk just a bit about that?

Alan Beaulieu 29:28

Sure. I'll be happy to and I'm trying to remember the specific context of that came up in because there's a couple ways to look at it. One is that I don't know if I showed this chart. You can remind me if I did or if I didn’t, I suppose Boston Consulting Group is a source of this. I always like to quote the source where they compared manufacturing in this nation to other nations major trading partners in the United States.

3. You should consider the US if you want to eliminate your supply chain risks in the future, where the cost basis is competitive.

And if we have a cost basis of 100, China's is 95 to 97, but with the increased supply chain risk, you have to wonder if it's worth that slight difference in cost. We are more expensive than Mexico. But there's an even larger supply chain risk there according to a lot of sources. And when they compare to Vietnam, it's a lot cheaper in Vietnam, but boy, there's a lot more risk. So, if you want to eliminate your risks, you should be centered on the United States where the cost basis is really globally competitive, we're much better than a lot of nations and not as much as some others. But when you look at onshoring, reshoring, Rich, what you find is that the reasons they come back to the United States cost is one of them. But there's a whole long list of others, everything from dealing with not wanting to deal with expats having to be overseas anymore to supply chain to cybersecurity, to intellectual property theft, to bragging rights to climate change. made here in America, you pollute the air a lot less than just about anything that you do by having it made in Asia. So, I mean, it's a good solid list where you can say yourself, you know, for the 2% difference in costs, I get all these marketing, right things going for me? Yes. And it's a pretty powerful argument. The other way to approach it is to ask people who's the largest manufacturing nation in the world, and they will go to China, like you're an idiot, because you didn't know. But then you ask them, who is the second largest manufacturing nation in the world? And they won't know. And you say, the United States of America and they will go, no. And you go yes. And then you can prove it, you just send me an email, I'll send you a chart and, but the reality is, most people in America don't know that. And I'm so proud of the fact that we're a major manufacturing nation in the world's second largest, like I said, and that in the near term, like in the next 12-15 months, we're going to go to record high levels of output in this country, not record high jobs, because there's thing called productivity that's come around, but record high output. I mean, that's so awesome to say about us that it's like a secret. And that's the sad secret. The secret that goes along with it is that people say we don't export goods, nobody wants to buy our stuff. And that's so not true. We're the second largest exporting nation of goods, not services. I'm talking goods, physical goods in the world. And we shipped around the world, to China to Europe, South America, and of course, Canada and Mexico and second largest that says something that says we can compete globally. And don't tell me we can't because we are every single day, and it's a significant part of our GDP. And again, America been taught over the decades, you know, put an L on your forehead for loser because we can't make anything here. And we certainly can't export anything. And I just think you come to believe that nonsense anyways, it's just yeah. So now wherever is listening knows the truth and can have fun at a party. You're

Steve Baker 32:56

Planning on it this weekend, baby. I might need that chart though. So, I'll email you. Great. Well, Alan, we do like to end our podcasts by asking one question that I feel like there's so many other questions. But this is the one that we always ask. It's our Oprah moment here. What's the one question we should be asking you?

Alan Beaulieu 33:21

Well, I guess there's two and I know I have to pick because you gave me one.

Steve Baker 33:26

Now, I'll make an exception for you, one for you and one for Brian.

Alan Beaulieu 33:32

Okay. On the downside, the question that if you want to want to ask me, what scares me the most is that as a nation, and with our allies, we could be heading into some really turbulent waters with China and with Russia. And I know they you know, it's good for the defense industry and all the rest of that, but it causes a lot of disruption, it'll really exacerbate the debt problem, because we will just go further and faster into the hole. And then there's the human side. So that's the state. I don't have any trouble sleeping at night. But that's one of the concerns. On the positive side, what COVID has shown is just how awesome we are. Because businesses here facing unprecedented shutdown. We got PPP and such, which was a great help. But we also pivoted like there's no tomorrow, we said, all right, that tear up the rulebook from yesterday, that doesn't apply anymore. We're going forward. And we figured it out. Look at all the success stories and the jobs that were created and how we can't find enough people to work the jobs that we want. And in many ways, we've saved the world. We certainly have saved people's lives, and we're doing just good business because business leaders have changed. And that gives me lots of hope for that. All right. We'll figure this out. We'll change as we go through the rest of this decade. If we can get through COVID. We can get to inflation and interest rates. We'll make it we'll be fine.

Rich Armstrong 34:54

A great message. Yes,

Steve Baker 34:56

Absolutely. Well Alan, I tried to some things up, I'm probably going to do a lousy job here, but just bear with me and help me, Rich helped me out if I missed anything. But a big message here, folks is that change is not an option, that you better learn to embrace it. And you better learn to, you know, use it to your advantage. And a lot of that has to do with being prepared and knowing what's coming. I really enjoyed the conversation about making a culture that's sticky. So, what how can you improve your stickiness the whole idea of a next gen workforce, I mean, call them millennials, Gen Y, whatever? Think about the things that the Great Game has always tried to promote a lot of trust, respect, giving people a voice, giving them pride in what they do a connection to not only their community, but to the world and doing something that's bigger than themselves. From my personal standpoint, you know, I wanted to know a lot about what I do with my own assets, and you were like, now's the time not to go to cash, do that later in the decade, for now, go defensive. And by that you talked about inflation adjusted assets, things like real estate would be good. And you also talked about very boring B flat things that were utilities and healthcare, that sort of thing is useful information. And here in a moment, we're going to ask you to tell him where to find out about more about ITR. And the optimizer got a couple more things, though, if you if you haven't caught it yet, there's still reasons to believe that the US is awesome. And this is what I capture. record high outputs number two in manufacturing in the world number two, in exports in the world, still the reserve the world's reserve currency, look at what we did during COVID in the massive pivots that all of you listeners that had to do and did so well. And that it's not an Armageddon, it's not zombie apocalypse, its information, prepare, it's up to you now to prepare for what's coming. So, for the short term, 2026, significant recession by 2029 2030, a depression that could last six years or so. So, I feel like I captured some of it. Is there anything else I missed? Rich? Alan, where am I at?

Alan Beaulieu 37:18

I thought you did a great job, Steve. I got to tell you; I'm personally feeling fulfilled that you listen. So

Steve Baker 37:27

I'm making up for all the years I didn't listen in school. And that's great. Well, man, it is so great to have you. Why don't you tell the listeners how to reach ITR? And then if you could just a little bit about where to find the optimizer?

Alan Beaulieu 37:43

Sure. You can reach ITR at ITReconomics.com, and the website will direct you to help you get to wherever you want to go. And there's a chat box that pops up real people will be there for you, no matter what the question is or what you're looking for. And if you want to know more about the optimizer, send an email to ITR at ITReconomics.com And in the subject line, just put optimizer and we'll take it from there. So ITR ITReconomics.com, pretty simple.

Steve Baker 38:15

It is pretty simple. And we will get all that in the show notes as well. So, Alan Beaulieu, thanks so much for being part of the podcast and part of our community. We really love you and appreciate you.

Alan Beaulieu 38:26

Oh, it's also I mean, you guys are always fun to be with. I mean, this is this is like a pick me up in the middle of the afternoon. This is a wonderful thing. So, thanks, gentlemen. Appreciate it.

Rich Armstrong 38:36

Thank you so much, Alan.

Steve Baker 38:39

Yeah, it's our pleasure. Well, let's keep the conversation going folks. send your questions, your stories, your best practices, your ideas, and of course your challenges and victories because that is capitalism at its best. Thanks for joining us and we'll see you next time.

Announcer 38:55

To "Change the Game" Podcast is produced by the Great Game of Business. To learn more, visit greatgame.com