NTEA's Latin-Kasper says slow growth in 2013 will give way to big years for work-truck industry as construction, government spending rise
Oct 1, 2012 12:00 PM, BY RICK WEBER
WHEN 2012 is over, it will have served as a significant transition year setting up a year of slow growth in 2013 and then a robust period for the industry in 2014 and 2015, according to Steve Latin-Kasper, the National Truck Equipment Association's market data and research director.
In his “Truck Equipment Market Outlook” at the Business and Market Planning Summit in Dearborn, Michigan, Latin-Kasper said the forecast for construction — a key truck-buying market — calls for 3.8% growth in 2013, then 10.2% in 2014 and 11.2% in 2015.
The logging application market will grow 9.7% in 2013 and once construction kicks into gear, growth is expected at rates of 16% and 11.8% in the years after that.
“We're still expecting slow growth in 2013 for the macro-economy as a whole, but that can be only because the industries that add up to macro-economy are expecting that as well, and most of them are getting better as we go forward into 2017 than we're expecting to be the case in 2013,” he said.
“What's driving logging growth is the expectation of growth in the construction industry in 2014. We can't start building things until have we lumber to build with. And the expectation there is that they will start building inventory in 2013 in the run-up to 2014.”
He said growth also will be driven by a rebirth of state and local government markets, which are expected to grow 2.9% this year, then jump 5.7%, 5.2%, and 5.5% in the next three years.
“For those of you guys who spend a lot of time trying to convince fleet managers in state and munis to buy your trucks and equipment, it's going to get a lot easier in 2013 and beyond,” he said. “Many of the states and munis will have finally caught up to the debt they need to pay down and will be spending increases in tax revenues as opposed to using them to pay down debt.”
A growing market for trucks
Retail sales of commercial trucks in the United States should experience solid growth in Class 1-3, going from 1.9 units in 2013 to 2.3 million in 2017, with Class 4-7 going from 155,000 to 203,000, according to Global Insight estimates cited by Latin-Kasper. Class 8 trucks and tractors will go from 206,000 in 2013 to a peak of 238,000 in 2015 and then fall to 198,000 by 2017.
He said real GDP will increase 2.1% by the end of 2012, then rise gradually to 2.8% by the end of 2013. For 2014, forecasts are looking even more optimistic than for 2013.
In terms of personal consumption and equipment/software expenditures, Latin-Kasper said there seems to be a lot of surprise on the part of some people regarding how slow this expansion has been.
“Part of that has to do with the kind of recession — it was primarily financial,” he said. “But we've had an additional problem going on for a long time. Going back to ‘81, after each recession, consumer and business spending grew less than it had coming out of the previous recession. We trace that primarily to one thing: We started accumulating debt and kept accumulating debt. We ended up with a situation where it's hard to grow out of a recession. We're growing, just not growing at what we came to regard as a normal rate of expansion.
“At the moment, this is our new normal: slow consumer expansion, slow business expansion, relative to history, coming out of a recession. We're going to keep growing slowly for at least another year. Do we need to worry about falling back into recession? The answer is, no, at least not anytime soon.”
Selling more truck equipment
According to the OEM/Body Manufacturers Monthly Statistics Program, growth in 2012 through June was up 16.5% over the same period a year ago.
“I don't think it's likely to change much,” he said. “We're looking at 15% growth for 2012 in total box-off truck chassis. The market for tractors is going to be better than that. Class 8 is split into tractors and straight trucks. Through June, trucks were up 29%, but tractor was 41.7%. It's been pretty good.
“Obviously there has been some big difference in segments. LCOE and conventional have been doing much better than cutaway and strip. In GVWRs, Class 7 (up 20.6%), Class 8 (up 29.3%) and Class 5 (up 32.7%) have been doing very well. The weak spot is Class 3 (4.5%) and Class 4 (4.2%).
“You can tie that to the fact that the construction sector accounts for 25% of all trucks bought, and dump bodies roughly 50% of construction trucks. Some segments of our industry are more dependent on construction than others. Class 3 and 4 are popular with the small fleets and individual tradesmen who do siding and brickwork and all repair and maintenance things on all buildings already up. They haven't been getting enough business.
“The average age of trucks on the road remains higher than historic norms. We've been benefitting from that the last few years. It remains a substantial factor in construction industries where they haven't been buying any trucks since 2006ish. There are a lot of older trucks remaining in that industry.”
Total work truck industry shipments grew from $75 billion in 2010 to $95 billion in 2011 and are expected to reach $113 billion this year. Latin-Kasper said that it might take awhile to match the total units of 2006, but another big year in 2013 could bring the market back to the total dollars of 2006.
“We're not expecting 2013 to be all that different from 2012, so we could be getting back to the 2006 dollar value peak towards the end of 2013,” he said.
While growth in truck equipment shipments was only 1% less than the increase in commercial chassis shipments in 2011, the gap is expected to be 12% in 2012, with chassis up 22.7% and truck equipment up 10.7%. Latin-Kasper explained it this way: “When you're buying new trucks, you tend to get rid of old equipment along with the old truck. You buy new equipment with a new truck. But end users may not be putting as much equipment on as they did on the old truck. These things tend to balance out. The truck equipment percentage will probably catch up in the next few years, so there's nothing abnormal about that.”
He said the heavy-duty truck segment will not be able to maintain its growth rate going forward, and will flip-flop with medium-duty, especially in straight trucks.
Heavy trucks and trailers
The index comparing trailer production to ATA freight shipments was 94% at the end of 2011, and went down to 10% by June 2012.
“Freight shipments are locked in at a 5% stable growth rate, and based on discussions I've had with Bob Costello at the American Trucking Associations, we don't expect that to change much in the near future,” he said. “We expect to get slower growth in trailer and tractor markets as well as for those types of trucks that are involved primarily for moving freight in the commercial vehicle market, and become more in line with this 5% figure over the course of next year. Anything to do with freight — tractors, trailers, van bodies — is likely to stabilize with the freight shipments index.”
The index comparing business truck production to state and local government construction spending is trending up, but has a long way to go.
“Construction has not come back, and that's important to many in this industry, if not all,” he said. “State and local spending on roads was, as of June, roughly 5% below what it was in June 2011. It's on the right trend, but we don't expect to go positive with more spending in the current year than previous year until probably the second quarter of 2013. Maybe by the end of 2013, they will be spending more than they were in the previous year.
“You won't see a bounce until construction spending goes up and the contractors they hire start buying more trucks and equipment to build roads and do maintenance that those contracts are for.”
Private-sector construction spending was up in 2012, coming off a “ridiculously low bottom” in 2010 where it was down 20% year-over-year. It was down to 6% by the end of 2011 and up 6% compared to the first half of 2011.
“Things are starting to move in private construction,” he said. “We expect the percent change to go higher because we were coming up from a ridiculously low bottom. That doesn't mean they're buying an awful lot. In terms of real units and the amount of trucks and equipment they need, it isn't going to be that big of a deal. It will not translate into big sales of trucks and equipment until 2014.”
What about material prices?
Latin-Kasper said there is a “great pricing environment” right now for metal ore, scrap, and products. Stainless/alloy steel scrap prices are down 22.2% for the year, steel products are down 6%, and aluminum is down 10.3% for the year and 3.9% for the most recent quarter.
“It's a good time to be buying metals and other commodities,” he said, “and it's probably going to get better as we go forward. Clearly we don't have to worry about steel prices going up anytime soon.
“Betting on steel or aluminum or any commodities staying on trend for longer than one quarter is a risky bet, but slow demand from the entire EU for commodities has had an impact on China. Until we start seeing global demand for commodities going up, I don't think we need to worry about prices going up, at least sharply.”
Truck chassis are averaging over 3% in price increases, truck and bus bodies are up 2.7%, and van bodies 0.7%.
“They all flattened out in the second half of 2012,” he said. “We're not getting big price increases, but that isn't that big of a deal because we're likely paying lower prices for materials, so we should be getting a bargain on the marketplace.”
Hecho en Mexico
On the import side of the industry, Mexico has become the clear top partner. Five years ago, it was a distant second to Canada. But that Mexican import side of the market grew by $15.6 billion in 2011.
“Imports from Mexico are going to be greater than all of the imports from everywhere else added up,” he said. “That is the future of our foreign trade on the import side. Canada has become a distant second.”
Canada, however, accounts for more of the industry's exports — $11.9 billion in 2011 — than all of the other countries put together.
Latin-Kasper stressed that there are still some markets that are worth considering. Between 2009 and 2011, Canada accounted for $4 billion of the $6 billion in export growth, but there's still $2 billion left over.
“And I'm guessing there's not one person in this room who's not looking for a piece of that $2 billion, so it's worth looking outside Canada for some spots to sell your products,” he said.
Latin-Kasper provided statistics for other export markets as well.
“Countries growing above average were the Mideast and Africa, up 60.2%. For Latin America countries other than Brazil, imports were up 93.9% to $712 million. For those of you thinking Brazil is the only place for business in Latin America, you might want to rethink that and focus on the rest of the region. And although Australia doesn't account for much in terms of total dollars, it has grown 329% in that period ($88 million to $380 million). China went from $71 million to $272 million, up 281%, and is becoming a much better trading partner as the economy becomes more developed. As they build more and more roads, they're also putting better equipment on those roads. They like US equipment. Their road model is basically designed on the US model, as is Russia's and most of South America's. Selling trucks and equipment that goes on them to most of the rest of the world isn't all that difficult if you actually are out there working and making those sales.”
In analyzing the year-to-year percentage change in the index measuring PRIME and heavy-duty truck production, he said that 65% to 70% of all Class 8 trucks are financed, so the interest rate ends up being an important factor on when people buy and how much they buy.
“We're expecting a unique environment in terms of the price of money, which is what interest rates are,” he said. “We're looking at the federal funds rate potentially not changing until 2015 at roughly a rate of 0.2%, which means the average prime is not likely to change until 2015. What's likely to happen is that as money stays cheap, it will fall to a normal rate of growth and then stabilize as we wait for the construction industry to kick into higher gear in 2014 and then turn up again. When the US economy does perform more closely with historical norms — a 3.2%, 3.3% annual growth rate — they will eventually raise interest rates. We're dealing with a crazy-slow-growth phenomenon now, but we don't have to worry about falling back into a recession. We don't really need to worry about a recess for probably another five years.”
Latin-Kasper's pros for 2013:
The dollar is still relatively weak. “That's good for exports. A relatively weak dollar continuing to be the case going forward is a good thing, and for those importing more than they're exporting, not a good thing.”
Pent-up consumer demand. “It really doesn't get loosened up in 2013. It probably doesn't happen until 2014.”
Consumers and businesses are sitting on piles of cash. “We're seeing that play out in two markets. We've seen sales of existing homes tighten up, and that's one of the big reasons home prices have had a bounce in the last quarter. There's more demand for homes than are for sale on the market. Building tends to follow that.”
The average age of trucks is still high.
Low interest rates.
A good money climate and good sales climate for the next few years.
The construction industry is growing slowly. “That finally changes in 2014.”
State and local government spending is still stagnant. “But that changes in 2014.”
The labor market imbalance is not going away any time soon. “That shouldn't be that big of a deal on commercial vehicle sales, but it won't help things grow faster if we don't ultimately fix that. That probably doesn't really happen until 2016ish or 2017ish, when we finally get the unemployment rate down below 7%.”
Recession/slow growth in the Eurozone and Asia, and political uncertainty. “Domestic and international are contributing to a continuance in problems with consumer confidence. And since consumers account for 65% of total expenditures in the US economy, we really don't take off until consumers stop being afraid. 2013 probably isn't the year that happens.”
All in all, though, the picture is favorable because the work-truck industry should grow faster than the US economy.
“It's not as good as we'd like it to be, but it's still pretty darned good,” he said. “Pretty much everybody is thinking that it's likely to get better going forward.”
Industrial Markets Outlook
Senior vice-president, Longbow Securities
Lustgarten said the strong recovery of on-highway vehicles in 2011 gave way to more moderate growth in 2012.
Short-term industry fundamentals in Class 8 remain OK: 2011 production was 255,000 (versus 154,000 in 2010), limited by supply-chain bottlenecks (chassis components, tires, transmissions, carpets, and floor mats). Tax benefits have helped, he said.
Recovery of freight continues but is slowing.
“Truckload pricing is firm as capacity remains tight,” he said. “There are real risks, but these are the best operating fundamentals since 2006-07. Class 8 sales are only at replacement levels; medium trucks are approaching the replacement sales rate. The driver shortage hurts despite high unemployment. Economic growth and industrial production are key drivers of truck demand.”
He said he expects slower economic growth of 2% to 2.5%-plus translates into growth of industrial production of around 3% to 4%-plus, rather than 4%-plus, and that usually means stabilization and modest growth of truck fleets rather than an expansion of fleets.
Major freight end markets may see demand reach a new normal level, he said. Truck demand should remain well below the peaks of 2006-2008 (376,000), and the recovery of the construction sector is still likely to lag in 2013.
Longer term, he said trucking is still the most effective mode to move NAFTA freight.
“Structural costs are rising: energy, equipment, emissions, labor,” he said. “The rail intermodal threat exists, but is limited. Regionalization of manufacturing and shortening of the supply chain will more than offset other threats such as increased safety stocks, warehouses, and cost-out logistic practices.
“Regulatory and structural changes can spur future truck trailer demand in 2013-2015. New regulations such as CSA, and the upcoming HOS (postponed for now to mid-2013) could eventually require more trucks on the road — about 3% — to service freight to offset reduced hours of work.”
He said the re-shoring/near-shoring effect can sharply increase North American manufacturing. Global companies are endeavoring to reduce and diversify supply chains after: difficulties in 2007-08 (freight rate surged, ports clogged, and containers in shortage); they were required to take product in the first quarter of 2009 that was on the water despite global recession; supply-chain disruption form the Japanese tsunami and earthquake and Thailand flooding.
Lustgarten said the first-ever heavy-duty truck fuel efficiency standards will reduce fuel consumption and greenhouse gases by up to 23% by MY2018, with the regulation beginning with MY2014.
Trucks are divided into three broad groups:
Combination tractor-trailers to reduce fuel consumption and CO
2gases by up to 23% by MY2018 starting in MY2014.
Gas-powered HD trucks and vans to cut fuel consumption and CO
2by 10% or 15% if run on diesel fuel by MY2018.
Vocational/work trucks reduce fuel consumption and CO
2by 9% to 10% by MY2018.
This could raise the average truck cost by $6200 or more, he said.
Lustgarten said if we can survive the next 12 to 18 months, the US potentially has one of the most favorable three- to five-year outlooks. He believes the US can become a net energy exporter with low-cost energy supplies (natural gas) and low-cost feedstock for industrial products, and there will be growth of energy markets and energy efficiency (motors, lighting led by LED, smart grid).
“There will be a big shift to Mexico and the US over the next three to five years as global manufacturing costs equalize in mid-decade,” he said. “Cat, GE, and the appliance industry are leaders. Component suppliers will be the big winners.”
He said that capital-goods markets led the US recovery, with the manufacturing ISM Purchasing Managers Index (PMI) showing a strong V-shaped recovery.
“Inventory change was a key contributor to GDP growth in 2010 but was slowing and more volatile in 2011-2012,” he said. “Residential markets are sluggish since incentives expired.
“Strong growth in China, India, and Brazil led the global economic upturn. The US is generally positive, with clear strength in manufacturing. Europe and Japan show signs of slow economic growth.”
Lustgarten said many problems identified in 2009 and 2010 are still with us:
Numerous concerns continue to lead to volatility in world financial markets.
Uncertain financial stability of sovereign nationals: Portugal, Ireland, Italy, Greece, and Spain (PIIGS).
Even in the US, there are rising concerns about Fannie Mae/Freddie Mac and state financial conditions in California, Illinois, and New York.
What is the exit path for all the fiscal/monetary stimulus?
Ongoing concern over bank exposure to commercial real estate.
“We have dug a deep hole to climb out of in 2011,” he said. “Manufacturing Capacity Utilization — 77.8 in July — is finally beginning to approach the more normal upper-70s levels of the past decade: 79% to 80%. Virtually every industrial sector is currently over-capacitized globally.
“Consumer spending is sluggish and hit a wall in the second quarter of 2011. However, it recovered somewhat in the third quarter of 2011, and was up 2.4% in the first quarter of 2012 and 1.5% in the second quarter.
“There's a lack of confidence in the economy. Even the Fed is concerned. There are changing consumer spending patterns. Proctor & Gamble is struggling as consumers cut back name-brand shampoo and toothpaste, and they're going to dollar stores instead of Target.”
He said a real increase in demand was one of the key drivers of economic growth in 2011.
“2010 was the year of the component supplier but supply chains were stabilized by 2011, ending the component boom,” he said. “2011 was the year equipment demand strengthened markedly: Virtually all industrial end markets grew double-digits in 2011. Trucks were up 65%, rail up 125%.
“The focus has been on bringing equipment purchases back to a level more consistent with current activity; employing lean techniques and improving factory throughput to reduce field inventories compared to history.”
He said 2012 was about finding the new level of normal demand.
“The automobile segment is unlikely to return quickly to 16 to 17 million car sales that prevailed from 1999-2005; perhaps 14 million to 15 million is the new norm,” he said. “Housing is unlikely to return quickly to two million starts; the new norm may be 1.3 to 1.6 million over the next few years, with cautious funding keeping starts well below 1 million at least through 2012.
“Construction and mining, engines and turbines, railcars and other heavy equipment will see renewed recovery through 2012 to levels likely below 2006 to 2008; 2011 gains were stronger than previously expected due to tax write-offs. Will 2012 be the last hurrah for a while?
“Steel production follows heavy equipment and infrastructure spending. Electrical markets resumed growth in 2011, driven by improving capital spending trends and the initial recovery of both residential and non-residential markets. Energy and alternative-energy market growth awaits resolution of government policies and priorities. Farm equipment end-market demand growth is dependent on global economic growth, global demand, and weather. Recent global weather issues have tightened global supplies and dramatically raised prices amid rising demand. Potential for shortages exists.”
Lustgarten said two types of pressures are driving equipment prices higher:
Type I: Manufacturing input costs increased as commodity prices surge from strong global demand and a weak dollar.
“The pricing effect is mostly low to mid single-digit increases. Most commodity prices have moderated, including oil.
Type II: Regulatory-driven price increases.
“There are new emission regulations for off-road equipment. The interim Tier 4 was effective January 2011 for equipment over 174 hp; all other equipment was effective January 2012. They're similar to 2007 truck emissions, but regulations will be phased into the off-road sector for multiple years. The final Tier 4 is effective January 2014. It's similar to 2010 truck emissions and also will likely be phased in over multiple years. The price impact of new regulatory-driven changes appears to be low- to mid-double digits.”
The outlook for global growth is still positive but 2012 growth is moderating. There was a mixed global economy in the first half of 2012, with three groups:
Surprising strength: US, Canada, Germany are now ebbing.
Soft landing with bigger downside risks: China, Brazil, India.
Recessionary: Non-German Europe, peripherals more severe.
The key risk is that politics engulf virtually every major region.
“Europe volatility continues, financial concerns are on the rise again, and there are elections in France and Germany,” he said. “China has a potential bubble in an opaque economy. There's turmoil, scandal, and a Politburo changeover amidst an economic slowdown. Brazil has a strong currency and government turmoil. The US has elections, a fiscal 2013 budget stalemate, and sequestering and massive tax hikes.”
US Economy: Still Sick and Muddling Through …
But Better Days Await
Senior managing director and co-founder
Macroeconomic Advisers, LLC
Varvares said he wants to keep thinking things will calm down and we will “get back into the rhythm of things.” Every year, he wants to say, “OK, this is the year.”
And now, he's almost to that point.
“I think we're just about there,” he said. “I think from 2013 on, and if the European situation settles down, we're in good shape.
“We've got some rough sledding ahead for the next three or four quarters, but I think things will get on a more sustainable upswing after that.”
He sees sluggish growth in 2012, firming in 2013 and 2014, with the real GDP growth going from 1.8% this year to 3% in 2013 and 3.5% in 2014.
There are elevated downside risks to the growth forecast:
Further intensification of the Eurozone crisis.
“The worsening crisis in Europe boosts downside tail risks. We're fine as long as we stay on the path we're on and we don't have some big event — like another Lehman Brothers collapse or a complete breakup of the Eurozone. That's the world we find ourselves in today. The circles I travel in, everybody talks about ‘big downside tail risks.’ They're talking about things that can go wrong in the economy that lead us to fall off the track we're on. The Eurozone could splinter. I'm talking about full splintering where it's not just Greece and Portugal exiting. I'm talking about full splintering where a few northern European economies decide to stay on the Euro and everybody else decides to go their own way. That would be a complete, unmitigated disaster — probably not as bad as the 2008-2009 recession, but it would be very bad. The European Central Bank's actions suggest that is becoming very remote.”
Fiscal cliff: Tax cuts expiring and automatic spending restraint in 2013.
“It is a big deal if the Bush tax cuts and Obama tax cuts expire at once. We think the probability it happens is relatively low.”
Hard landing in China.
“Because of the inability of the global economy to ramp up, growth in China shows signs of slowing. They have way too much internal investment driving their economy today. It's unsustainable and has to go down. Will there be domestic demand picking up to take place and will the global economy pick up to provide a boost via their exports? I think most people think yes, but there is some risk.”
Sharp rise in energy prices related to geopolitical tensions, specifically in Iran.
“If there is an event in the Gulf and Iranians try to block the Straits because they're ticked off, there is a possibility we have a very sharp spike in oil prices. We don't think that rise would be long-lasting because the International Energy Agency has pre-announced they would tap strategic petroleum reserves.”
Resumed declines in home prices stalling the recovery in housing.
“There are signs that the shadow inventory is shrinking, so we think this is a sustainable upturn. We're looking for a 5% increase in home prices this year, which would be huge. But if home prices don't sustain this rise, that's another risk in this economy. It plays a big role in household balance sheets and could lead us to stay in a slow growth trap for a longer period of time.”
He said the most-likely scenario is that we will muddle through moderate GDP growth that firms up next year.
“Because of the drought, instead of 2% growth, we're looking for 1.5% growth over the second half of this year,” he said. “The good news is that crop insurance is widespread and farmers and purchasers of farm output hedge the price risk. The hit to the economy from a decline in farm output is not as onerous as if there was a strike in Detroit.
“We just can't get the economy on to a fast-growth track. We're slowly climbing out of the hole. With that slow growth, we get very slow employment growth and a slow decline in the unemployment rate.
“Mexico had a much deeper recession and a faster snapback. On the backside of the recession, they're not facing the same headwinds as the US and Canada. The anticipation is that as global growth picks up, as Europe recovers from its recession, global growth will rise. Canada is expected to fare about the same as the US but not quite as vigorous. We expect the US dollar to edge lower, and that will give us an extra boost from faster export growth.”
He said there has been grudging labor-market improvement because “especially for young people and age groups near retirement, their labor-force participation rates have declined because they've dropped out. The job market is that bad that it's discouraging people to drop out. It's that much harder to push unemployment rate lower. It does impact consumer confidence and spending.”
The core inflation has settled back below 2%.
“It's not just the unused capacity in the labor and product markets that tend to put downward pressure on inflation,” he said. “The picture is not always what we'd like it to be, but we believe that slack matters for inflation. Think about your own businesses. Don't you compete more aggressively on price to win business when you have a lot of excess capacity?
“We see inflation staying below the 2% target level that the Fed has exclusively announced. If you convince everybody that inflation will remain low, you're not going to load up on debt and try to grow your business in anticipation of much higher inflation that will give you cash flow to make those payments. You won't make those bets if you're confident that inflation is going to remain low and stable.”
Varvares said US equity markets are poised for solid gains.
“Equities are undervalued,” he said. “The stock market could still do well because it's all about the valuations given the current level of dividends. We're way undervalued and we can see something like a 12% increase in the stock market this year, and another 12% next year.”
Fiscal policy notes:
Home prices are expected to be up 4.9% in 2012, 2% in 2013, and 2.5% in 2014.
“We're being conservative here. We still have shadow inventory - those that might be taken back by the bank and put on the market. Secondly, we haven't fixed the finance system.”
Equity prices will go up 14% in 2012 and 2013, and 2.4% in 2014.
Risk spreads will narrow.
There will be slow foreign growth in the second half of 2012, but that's expected to rise gradually to 4% in the third quarter of 2013, and average 3.8% in 2014.
Oil prices fell $21 in the second quarter of 2012 and are projected to rise $10 through the end of 2012, and then fall $6 through the end of 2014.
Inflation is expected to slowly return to 2.0% from 2.2%.
He said there will continue to be a slow release of pent-up demand as households have repaired their balance sheets, employment continues to rise, and households become more secure about their future.
He also expects uncertainty to recede and a risk appetite to return.
“Everywhere we go, every client and business we talk to tells us, ‘Yeah, we're in great shape, our order book is pretty full, our balance sheet is awesome, we could expand on a dime,’” he said. “We say, ‘Well, why don't you?’ They say, ‘I'm concerned about what's happening in Europe. I'm not going to bet the company.’ So risk aversion is really holding back the economy. And if we can help clear up uncertainty and get back to normal risk-taking activity that drives economic growth, we'll be in much better shape.”
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