It is official, the U.S. economy is in recession. This recession is different; for the first time in history, we have created a self-induced recession. Getting over the weirdness of that is difficult, but there is a benefit: the economy will recover quickly. Unlike earlier recessions, the US came from a strong economy and headed into an abrupt threat called COVID-19. Our nation’s government, along with many others, decided to shut down substantial portions of our economy in order to reduce the death rate. And as a result, most of the economy came to a grinding halt.
Gross Domestic Product Indicator
Before it will get better, it may get worse. Forward-looking economists agree that the 2nd quarter (ending in June) will show another steep decline in our nation’s economy. However, then the 3rd quarter promises a flattening and then beginning of a quick recovery period, as you can see below in the ITR Economics Gross Domestic Product (GDP) chart*. Although the GDP is a very high-level indicator, the Green Industry usually tracks closely along with the GDP so we can expect to match this graph. However, there is one difference: in this recession, the Green Industry did not decline as much as most other segments; our dip is much shallower than the U.S. economy at large.
It is important to realize that each segment of our economy will recover at a different rate. For example, those involved with automobiles and the travel/leisure industry will have a long road of recovery ahead of them. Most landscape contractors say they have work scheduled well into mid-late summer, however, the question many of us are asking is how much work will be out there in late summer and fall.
Recovery Ahead
The Green Industry has and will be fortunate. In our service area, since we were part of the essential construction industry, we were not shut down. For the months ahead demand for our products and services is likely to remain steady. In contrast, as we look at it from the beginning of June, it appears that the construction industry will have some interruptions but will recover showing decent numbers for the next two years to come.
Renovations and Renewal
Home renovations provide another solid indicator for our Green Industry. As in 2010, people are investing more in their living spaces. Those people quarantined at home for 3 months produced lots of home improvement ideas and they may have the time to implement them. One landscaper told me when he shows up at someone’s home for a quote, he is deluged with requests; he said they are begging to buy. It may be that you do not experience people pleading with you, but renovation demand is up from before. Hopefully, the July release of the renovation indexes will have the numbers to prove that point.
2020 Bottom Line
The Bottom Line for 2020: there is sufficient work out there, you should focus on getting jobs done and getting paid. Also, control your expenses, and continue to build your cash position.
*I have been following ITR Economics webinars for a long time. I have found their practical information to be key in making business decisions for Wolf Creek Company. ITR supplies industry forecasts, economic updates and even consulting services.
