Brighter Days Ahead

After all the rough weather in 2001, you're probably readying yourself for more turbulence during this new year. With the ongoing war against terrorism and economists debating the length and severity of the U.S. economy's troubles, it's easy to see why you might want to batten down the hatches in preparation for future storms. The recent financial jitters in this country have had their impact on the environmental industry along with the rest of the U.S. economy.

Given last year's gloomy event, our forecast for 2002 may come as a shock. After looking at the overall economy, we see encouraging signs beginning to emerge and our outlook is surprisingly optimistic. When this column was written in November, the Nasdaq composite index, which is comprised mainly of high-tech stocks, had moved up 29 percent and the Dow Jones industrial average, which tracks 30 large American companies, was up 17 percent since their mid-September plunges. The strong autumn rally of the stock market prompted Alfred Goldman, chief market strategist at A.G. Edwards brokerage firm, to state that the 20-month bear market is dead. "A new bull market has begun," Goldman said in November. Echoing this positive sentiment, in November the investment research periodical Value Line predicted a 32 percent increase in the Standard & Poor's 500 Index (the index that tracks 500 industrial, transportation, financial and utility stocks) over the next six months.

Of course, there are other analysts who are skeptical that the recent rise in stock prices means that U.S. stocks are starting to stampede into bull market territory. For example, some of them are unwilling to predict the direction of the stock market until they have more information about certain economic indicators such as the strength of the holiday retail season and fourth-quarter earnings of key American companies. Yet, overall, many investment analysts are now optimistic that the stock market will rebound from its recent weak performance.

You might be asking yourself what the bulls of Wall Street have to do with the environmental industry. .According to an article by Paul J. Lim published in the November 19, 2001, issue of U.S. News and World Report, the resurgence of the U. S. stock market is significant because historically stocks tend to recover from economic downturns about three to six months before the economy does, making them a leading indicator of the economic health of our country. If the overall economy does improve this year, that should be positive news for us in the environmental industry as well.

Federal Reserve Chairman Alan Greenspan also has been making upbeat comments about economic trends. In response to some economists' predictions concerning the end of the surging productivity that fueled the "new economy," Greenspan stated on November 13 that such gloom is unwarranted. According to Greenspan, surveys show that businesses have put in place only half of the new technologies that could be used to boost output. That means only 50 percent of possible gains to productivity from high-tech investment have been realized.

"The long term outlook for productivity growth, as far as I'm concerned," Greenspan said, "remains substantially undiminished."

The Fed chief added, "It's one reason why, even though we've been going through a very trying period during the last year or so, the outlook in my judgment looks to be extraordinarily good."

Another important Washington figure is hopeful about the 2002 economic outlook. When interviewed on November 25, U.S. Treasury Secretary Paul H. O'Neill said the economy seemed already to have recovered from the shock of the terrorist attacks on September 11.

"I think if you look at the data on September 10, we were in the beginning of a recovery phase, and I think we've moved back there," he said.

"I think there's no doubt we've had a slowdown," he said, "but I think we will see a recovery in the U.S. economy beginning in early next year and growing as we move through the rest of the year.

In addition, our own handpicked forecasters have some promising predictions concerning trends in the environmental industry in 2002. Turn to our "Executive Forecast" article to find out what our top environmental executives see happening in 2002 concerning business developments.

In this issue, we're also presenting three additional environmental experts who focus on other top environmental issues in 2002. In his article, Andy Siedel, President and CEO of US Filter, points to encouraging trends in water treatment. He asserts that due to the ever increasing need of consumers and industry for clean water companies engaged in the delivery of water treatment systems, products and services will enjoy strong demand for years to come. Bill Forcade, an environmental attorney, highlights important air quality issues in his article. Another environmental attorney, Truly Bracken, identifies important trends concerning waste management and resource conservation in her forecast.

So before you bundle up in your raincoat and galoshes and seek shelter from the expected deluge, check out our forecasts for the coming year. The economic climate in 2002 might be sunnier than you think.

This article originally appeared in the January 2002 issue of Environmental Protection, Vol. 13, No. 1, p. 6.

This article originally appeared in the 01/01/2002 issue of Environmental Protection.

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