January '20

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rv-pro.com January 2020 • RV PRO • 21 tinue to play their vital role in sup- porting mortgages. "In 2019, interest rates turned lower rather than higher, which was a surprise," Hoyt says. "The reason was the unan- ticipated trade war, which was clearly a negative and reduced economic prospects significantly relative to expectations." Tight Labor Market Persists If robust employment is keeping the consumer happy and the housing market bustling, employers are tearing their hair out. "Because of the tight labor situation, our companies have not been able to add as many workers as they would like," Pal- isin says. "As a result, it can be difficult for many of them to take on new business. We expect that to remain a problem in 2020." Industry also is seeing more job shifting, in which people leave their cur- rent positions for opportunities elsewhere. "Employers are now looking at whether they need to adjust their com- pensation policies to retain the talent they have developed," Palisin says. "So far, we have seen only a gradual increase in the cost of labor, but we expect more accel- erated wage growth in 2020." A tight labor market is expected to continue in the next decade. "The workforce will be put under con- tinuing pressure in the future," Palisin says. "Over the next 15 years – for the first time in the U.S. – there will be more people of retirement age than under the age of 18. And a contraction in immi- gration is also putting pressure on the workforce. Companies will have to look for other ways to grow without hiring workers who might not be available." For those companies that can't get enough people, they might look to robots to do the work. That's the mantra for the employer of the future, according to Palisin. "Rather than invest in recruiting and training people for labor-intensive jobs, our members have been investing in automation and capital equipment," he says. "We expect this trend to continue in 2020." Not all employers can foot the bill, however. "While larger companies can automate internally, small- and mid-sized ones need to call in external consulting resources," Palisin says. "That can be challenging, because many smaller businesses do not have the financial resources to do so." Indeed, manufacturers around the nation seem to be shy of investing too much in capital improvements of any kind. "Manufacturers are nervous, despite their success in reaching their earnings estimates," says Bill Conerly, principal of Conerly Consulting in Lake Oswego, Ore. "This is showing up in capital spending numbers, which were big in 2018 coming out of tax reform, but which are not so big now." Even forays into automation are on hold. "Labor costs are going up and good workers are hard to find," Conerly says. "Interest rates are low and companies are flush with cash. You would think that invest- ment in labor-saving technology would be going great guns, but it's not. Why? Uncer- tainty. Businesses wonder if economic con- ditions in the next few years will justify more capacity or even more efficiency." The numbers from Moody's support Conerly's observations. "We expect real nonresidential fixed investment to grow by 3.2 percent annu- alized in 2019 and 2.8 percent in 2020," Koropeckyj says. "That's well below the 5.4 percent average over the last two years." C O R P O R A T I O N United States Warranty S E R V I C E , I N T E G R I T Y A N D T R U S T S I N C E 1 9 7 5 SERVICE CONTRACTS ON THE ROAD, WE'RE ALL FAMILY. W W W. U S WC E AG L E . CO M ( ) - • R V S A L E S @ U S WC E AG L E . CO M Established 1975 UN I T E D ST A T E S W A R R AN TY S E R V I CE I N T E GR I T Y T R U S T Coverage for model years 1995-Present Customer Payment Plans No Monthly Quota

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