3rd Quarter 2018 Hotline
Market Watch by Joe A. Hollingsworth, Jr.
Well, officially, we are in the second longest economic expansion ever! And, as I said before, there is an awful lot of naysayers, and they cannot help but talk about it constantly. However, they are wrong!
The tax cut that Congress passed has motivated businesses of all sizes to reassess the opportunity of using the tax savings for capital expenditures that will dramatically increase productivity. This is happening from sandwich shops to major defense firms. CFOs are actively using the tax savings to dramatically increase productivity and profits. This is playing out in company valuations, share prices, capital expenditures, etc., thus benefitting everyone all the way down to the factory floor. Daily, we talk to management of any of the 124 companies that we lease to, and it seems like that is their opening line. They are excited about what they can achieve.
Onto the statistics…Last month, the Bureau of Economic Analysis revised its assessment for the 1st Quarter of 2018; the BEA now says that the GDP grew 2% annualized, down from the previous figure of 2.2%. A more accurate measure averages factors in statistics on incomes which shows growth at 2.80%. The difference between this is the BEA does a separate analysis by adding up all the different sources of wages, profits, and various forms of income. BEA calls this Gross Domestic Income. Using those numbers, it is closer to 3.7% annualized. Generally, forward-thinking economists average these two together, thus the 2.80%. This shows the GDP is accelerating for 1st quarter, and 2nd quarter 2018 should be north of 4.5% using the same average.
Okay, maybe you are still a naysayer……A few things that could happen on the upside such as the NATO Alliance fully funding their part of the military, North Korea continuing to calm down, and the WTO making China play by the rules – all of which will indirectly affect the stability of the global economy, that will result in better support for the US growth. But, here are a couple of big surprises that we predict are coming October of this year. These will totally turn the midterms toward conservatives and also assure the re-election of conservatives for the presidential cycle: 1) The NAFTA surprise! – a greatly improved NAFTA agreement that gives blue collar and union voters a direct impact and reason to support conservatives; and, 2) President Trump through an Executive Order will invoke a 2002 Supreme Court ruling that sets the stage for indexing capital gains for inflation like most IRS rates are. This in effect would lower taxation on capital gains which always provides significant economic growth.
Based on all the above, this will be by far the longest expansion in American history. Internally, our company is preparing for the ride! Therefore, industrial builders, build baby build!
"I fully recommend working with The Hollingsworth Companies if cost or time driven schedules play a part in your company's opportunity because they do deliver within budget and on time with no change orders or surprises." -- David B. Sutherland, CMS Companies
"Southern states are home to 50 million more residents than the Northeast. In corporate growth, only the South has shown a positive net migration in the early 21st Century." -- Plano Star Courier
"We invited The Hollingsworth Companies to our Atlanta Offices. Within two weeks all negotiations were completed and the lease was executed. From beginning to end, it only took 45 days to complete our requested up fits." -- David B. Sutherland, CMS Companies
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“From greenfield startup to becoming a national industry leader 10 years later, Hollingsworth continues to play an invaluable role in Service Center Metals growth and success.” -- Scott Kelley, President and CEO, Service Center Metals
"Hollingsworth entered an agreement to ensure quick delivery of the pre-approved standard building sizes . We are committed to deliver the structural steel, ready for erection, in just 6 weeks from receipt of a final building order." -- Jeff Carmean, General Manager, Nucor Building Systems
"Joe Hollingsworth participated as one of our first equity investors. In addition, Joe Hollingsworth has served as a board member and leading advisor for strategic planning and direction." -- Scott Kelley, President and CEO, Service Center Metals