Day three of SMC³ supply chain conference brings mixed economic forecast

Bright and early on the morning of June 27, the extemporaneous, animated speaking style of economist Don Ratajczak, who graced the Connections stage for the final time this year, provided a jolt many attendees likely needed after a late night of rocking out to Lou Gramm, the voice of Foreigner.

While Ratajczak seemed energized, his outlook on the economy, both domestic and global, was muted. While the economy is humming along currently, there are some hiccups on the horizon, he said during the final day of the Connections 2018 supply chain education conference. Those emerging problems include the Trump Administration’s outlook on global trade and the overall direction of the stock market.

“Right now the stock market is lower than it was when the taxes were passed, so basically we’ve wiped out all the benefit of the reduced corporate taxes, at least in terms of equity value,” Ratajczak said early on in his discussion, setting the tone right away. “And the president is well aware of that, so maybe he’ll make some adjustments.”

Attendees come to Connections for the unvarnished truth about the world, and Ratajczak’s ability to provide the crowd with the information they need to make informed decisions about economic pain points is unparalleled. As far as global trade, Ratajczak made his position quite clear.

“This idea that the president has that we are losing because we run trade deficits is simply not good economics,” he said.

After talking about trade imbalances, he praised the Trump Administration for taking another look at some of the trade deals enacted by previous administrations. Ratajczak told the audience that in the past, there was a rush to boost the global influence of the United States, and this may have caused previous deal makers to rush into agreements with other countries.

“I won’t say they’re the worst deals ever negotiated,” he said of these treaties, “but they’re not the best deals for us. Renegotiating these deals makes some sense.”

Ratajczak then discussed the Mexican elections and the implications that will have for NAFTA (North American Free Trade Agreement) and the renegotiation of the deal. He said that if the election turns out the way the polls say it will, Trump likely missed his window of opportunity for re-casting NAFTA. This uncertainty with Mexico is characteristic of the uncertainty that pervades America’s current stance with a number of other countries.

“So I find it a little difficult to make forecasts now,” he said.

After giving that warning, Ratajczak then told the audience that “the United States is doing fine,” and that there’s strong consumption activity and GDP growth. The savings rate worries him, though, and the amount of uncertainty in the market could start to impact the growth rate, he said.

“Hey, how many of you guys know what your costs are going to be in six months?” he rhetorically asked the room full of shippers, 3PL and carrier representatives. “So that’s a big problem.”

Ratajczak’s sober, fair look at the economy is always a welcome part of SMC³ events. His presence at the conferences is a highlight every year, and attendees of future conferences will no doubt miss his insight and excitability.

The three-day supply chain conference Connections 2018 was held this year at the Greenbrier Resort in West Virginia. SMC³’s next educational event is Jump Start 2019 in Atlanta next January.