By joining the Louisiana Irrigation Association, you will have access to low cost insurance, discounts on books and training, networkning opportunities, assistance from the LSU AgCenter and much more. Join today!
LIA provides recertification training for contractors who are already licensed. Stay up to date in order to maintain your licesnsing. CLICK for more info and to register for our next training session.
The Louisiana Irrigation Association provides training at convenient locations throughout the state. Take advantage of this opportunity to become a licensed Landscape/Irrigation contractor.
The strategic planning process will help us set the goals for LIA’s future and determine how best to achieve these goals. The primary purpose of the strategic plan is to connect three key areas: our mission, our vision, and our plan to achieve our long term goals.
The Louisiana Irrigation Association provides assistance in labor issues by bringing you the latest news and strategies in dealing with labor issues. Join today and let us help you resolve your labor issues
The Louisiana Irrigation Association stays in constant contact with our elected officials and provides input on legislation that affects landscape and irrigation contractors. By joining LIA, you will have a voice in legislation that affects you and your business.
LIA brings you the latest information on grants to help your business.
Our Mission is to promote efficient irrigation practices through the proper design, installation and management of irrigation systems through educational and informational programs.
To participate in the legislative process and effectively represent our membership in that process.
To cooperate with other agencies and organizations in providing pertinent information to irrigation contractors, the irrigation industry and general population.
This site contains Training and Recertification opportunities, LIA activities, and a membership application form as well as other valuable online resources.
Tooke Nursery & Landscape, Inc.
Greenman Dan, Inc.
Severn C. Doughty Sr.
Address: 444 Fox Trot Drive
Mansfield, Louisiana 71052
M & M Lawn & Irrigation
LSU AgCenter Board Member
Dr. Jeb Fields
LSU Ag Center
Director at Large
Dr. Stacia Davis Conger
LSU Ag Center
Board Meeting Minutes February 8, 2023
Board Meeting Minutes April 26, 2023
Board Meeting Minutes February 9, 2017
Board Meeting Minutes April 25, 2017
Board Meeting Minutes October 25, 2017
Board Meeting Minutes February 8, 2016
Board Meeting Minutes April 19, 2016
Board Meeting Minutes October 19, 2016
Board Meeting Minutes October 19, 2016 (Addendum)
Board Meeting Minutes March 19, 2015
Board Meeting Minutes July 21, 2015
Board Meeting Minutes October 14, 2015
Board Meeting Minutes March 3, 2010
Board Meeting Minutes July 1, 2010
Board Meeting Minutes October 5, 2010
Board Meeting Minutes February 16, 2011
Board Meeting Minutes October 4, 2011
Board Meeting Minutes December 30, 2011 (Addendum)
Board Meeting Minutes March 13, 2012
Board Meeting Minutes June 19, 2012
Board Meeting Minutes July 20 & August 4, 2012 (Addendum)
Board Meeting Minutes March 12, 2013
Board Meeting Minutes July 16, 2013
Board Meeting Minutes July 16, 2013 (Addendum)
Board Meeting Minutes October 14, 2013
Board Meeting Minutes March 11, 2014
Board Meeting Minutes March 11, 2014 (addendum)
Board Meeting Minutes July 15, 2014
Board Meeting Minutes October 13, 2014
Joining is easy!
A membership with the Louisiana Irrigation Association is a mark of quality for your business. Members of the LIA also enjoy a variety benefits, perks and services which are listed below. Read on for more information!
No matter what industry you are involved in, keeping in contact with other individuals in your line of work can only be a benefit. For this reason the Louisiana Irrigation Association (LIA) was formed. LIA strives to service members with the utmost in professionalism, experience and consideration through every aspect of the experience with the Association. Regardless of what your role in the industry: contractor, manufacturer, distributor, service company or consultant - LIA provides numerous benefits for its membership.
As an LIA member you will be recognized as a professional, distinguishing yourself as part of an elite group from the irrigation industry. Industry strength is gained through association with other irrigation professionals.
Protection from Unreasonable Regulation
The LIA expects to have a significant impact on legislation at the state and national level. LIA will get your message through to lawmakers on issues affecting the irrigation industry on your behalf.
Membership allows you the privilege of exhibiting the association’s logo as a symbol of your professionalism and commitment to excellence.
Published quarterly, this newsletter keeps you up-to-date on what’s happening in the irrigation industry on the state and local level, changes in state and local regulations, and new products – as well as specific business management and technical tips.
There is little doubt that an LIA membership is definitely worth your investment. For more information on becoming a member, please call Severn Doughty [318-872-4677]. With your membership you will receive an LIA Certificate of Membership, LIA Decal, Directory, the Newsletter – and a voice in legislative issues!
The LIA website gives members immediate access to the latest industry news as well as education and certification opportunities, an electronic archive of the newsletter, opportunities for advertising through banners and our special classifieds section, and much more!
More benefits include:
The Louisiana Irrigation Association (LIA) was founded in 2005 primarily to provide classroom training for Landscape Irrigation Contractors to be proficiently trained enough to pass the Louisiana Department of Agriculture & Forestry’s (LDAF) Landscape Irrigation Contractors license exam. In addition every three years LDAF requires that Landscape Irrigation Contractors must be recertified by taking an 8 hour irrigation training course in order to renew their license. LIA provides classroom recertification training every year to help Landscape Irrigation Contractors satisfy LDAF’s requirement (CEU’s) for training.
LIA also helps to promote efficient irrigation practices to other agencies, organizations, irrigation contractors, the irrigation industry and the general population through proper design, installation and management of irrigation systems through our quarterly newsletter, The Louisiana Irrigator and the LIA website www.l-i-a.us.
LIA works on a cooperative basis with other national, state and regional ‘Green Industry’ organizations which include:
In addition LIA enjoys an enhanced cooperative relationship with the Louisiana Department of Agriculture & Forestry and benefits from Research and Extension through the LSU AgCenter.
MEMBERSHIP LEVELS and FEES
The Louisiana Irrigation Association invites you to join this active organization. Simply visit the Application Page and become an LIA member today!
The LIA has a calendar-year dues structure as follows:
TYPE OF MEMBERSHIP
Joining is Quick and Easy!
Applications may be completed digitally or on paper and mailed in. Make sure you turn in both the form and fees!
Make your choice from the application and renewal methods listed above to get started.
American Horticulture Letter to Congress
I have known Craig Regelbrugge, Senior V.P, American Hort.for 10 years and he has been a champion for the ‘Green Industry’. LIA has signed onto the letter.
Severn C. Doughty Sr. Ph.D. Executive Secretary, LIA
EPA’s Worker Protection Changes
What’s Not To Like About The National Gardening Survey
SCOTUS Allows Landowners to Challenge WOTUS
Gardeners Are Spending More
U.S. Releases Parasituc Wasps to Fight Tree Beetles
Obama Administration Issues Final Rule on Overtime
Top Ten Design Trends
New Transportation Funding is Good News
H-2B Bill Signed Into Law
Horticulture Sales Are Up
Horticulture Notice of Intent
LDAF Fees Go Up
Bees in Further Danger
Over Irrigation in Most Huntsville Homes
Looking For a Cure to Rose Rosette Disease
EPA Releases Final Clean Water Rule
House Passes Bill to Stop EPA Water Rule
The Importance of a Well Maintained Lawn
Pink Water in Palmetto
Anti WOTUS Bill Moves Forward in the House
The Road to Immigration Reform
H2B Cap Relief for 2019 - Contact Your Senator
House Introduces Bipartisan Guest Worker Bill
House Farm Bill Fails
Top 10 Traits For Success
AmericanHort Update Letter
9 Ways To Tell If You Are A Leader Worth Following
What You Need To Know About The New Tax Laws
Supreme Court Vacates Stay by WOTUS
Holiday Retail Sales Increased
Download Your eVerify Records Before They Are Purged
2023 Top Garden Trends
American Horticulture Statement on AG Act
How To Be Involved In The Legislative Process
2017 Landscaping Trends
DHS Provides Relief to American Businesses
Update on Federal Actions Affecting Landscapers
Demand High For Sustainable Residential Landscapes
Plant Hardiness Zones Shift North
It’s Time To Push For H-2B Relief
H-2B Language in Budget Bill Explained
The Relationship Between Irrigation and Pest Control
Basic Methods to Prevent Wage and Hourly Lawsuits
Extracting Water From Air
Gas Prices Remain Stable at Start of Spring
Treatments for Crape Myrtle bark scale
Phenology Maps Show Just How Early Spring has Come
H-2B Cap Reached for 2017 Fiscal Year
EPA to Review 2015 Waters of the U.S. Rule
OSHA “Ongoing Obligation” Rule May Be Shortlived
Six Standout Landscaping Trends From 2016
How to Become a Big Thinker
Six Customer Silver Bullets
Cost Accounting: Why Do We Do It This Way?
House Fails to Address Critical H-2B Provision
Judge Blocks Overtime Rule
Tuesday & Wednesday, July 10, 11, 2023
LNLA’s Certified Nursery & Landscape ProfessionalReview & Exam, TBA Lafayette, LA; Contact: 985-237-2939 or firstname.lastname@example.org
Wednesday, October 24, 2023, 5:00 P.M.
LIA Board Meeting, Duke’s Seafood, 33920 Hwy., 16, Denham Springs, LA
Thursday, October 25, 2023,
Recertification Training & Annual Meeting
7:30 A.M.: Registration
8:00 A.M.: ‘Two Wire Systems’, Instructors, Christopher Friedman, LIA President & NorthernTerritoryRepresentative for Irrigation Mart and Wes Gauthier, LIA Past President and Rainbird Commercial AccountsManager, Southeast Region
11:45 A.M.: Annual Meeting Luncheon till 1:15 P.M.
Afternoon Session: ‘Electrical Trouble Shooting’ Mike Goree, CID & CLIA; Duke’s Seafood, 33920 Hwy., 16,Denham Springs, LA; Contact: www.l-i-a.us or 318-872-4677
Wednesday & Thursday, November 7 & 8, 2023, 8:00 A.M.
LIA Training ‘Irrigation Basics for Landscape Irrigation Contractors’ instructor, Bill Branch; Dukes’ Seafood33920 Hwy.16, Denham Springs, LA; Contact: www.l-i-a.us or 318-872-4677
OCTOBER 25, 2023
DUKES SEAFOOD & STEAKHOUSE
33920 HWY. 16
DENHAM SPRINGS, LA 70706
CLASS REGISTRATION $120.00 Members, $220 Non-Members
[Register Early - 37 have already registered and there are only 23 slots left]
There are two ways to register:
OPTION 1. Fill out the online form below and pay by Paypal or mail in your check.
Please Note: Your registration is not complete until payment is received.
OPTION 2. Download and fill out the registration form and mail it with your payment to the address on the form.
Please Note: Your registration is not complete until payment is received.
The Louisiana Irrigation Association was organized in 2005 and is a 501 © (5) tax exempt corporation. Its Mission is “To promote efficient irrigation practices through the proper design, installation and management of irrigation systems through educational and informational programs. To participate in the legislative process and effectively represent our membership in that process. To cooperate with other agencies and organizations in providing pertinent information to irrigation contractors, the irrigation industry and general population.”
One of the ways the Louisiana Irrigation Association fulfills its mission is by providing grant opportunities to its members.
An excellent resource for field personnel and those new to the industry, this manual covers the basics of irrigation system installation and maintenance. Organized to follow the typical process for system installation, the book addresses blueprint reading, tools, basic hydraulics, field wiring, controllers, working with valves, pipe fitting, troubleshooting basics and more.
This is a supplemental reference book recommended by LDAF and highly recommended by LIA.
Learn how to calculate and compare water allowance to actual use with this step-by-step reference manual. Topics include calculating site water allowance based on weather, ET and uniformity, and determining actual or estimated water use. Includes detailed examples, graphs and charts, plus instructions on how to modify a design or existing site to meet a specific water allotment. Certified Water Conservation Manager-Landscape exam reference.
Learn the differences between managing a service company and an installation or contracting business. Focused on the business aspects of a service company, this resource covers how to sell and market servicing irrigation systems to grow your business.
This is the manual the Louisiana Department of Agriculture (LDAF) recommends for persons wishing to take the Landscape Irrigation Contractor license exam.
Learn how to diagnose common irrigation faults found in the field. This workbook covers meters commonly used in landscape systems and how to read them, as well as the recommended sequence to troubleshoot electrical problems. Appropriate for use as a lecture or laboratory exercise.
by Vince Nolletti
This workbook is a basic primer for electricity in irrigation systems. Review electrical terminology, the rationale behind electrical codes and safety requirements, typical circuits used in control system wiring, and calculating the correct wire size and length.
444 Fox Trot Dr.
Mansfield, LA 71052
Dr. Severn C. Doughty, Sr.
Most homes have irrigation systems installed to provide supplemen-tal water to the landscape when rainfall is insufficient. There areimportant benefits to having an efficient irrigation system:• It provides a healthy landscape.• It targets water to the intended plant material.• It creates a softer environmental footprint by saving onherbicides, insecticides and fertilizers.• It limits water runoff from landscapes.• It saves money on utility bills.Automatic irrigation systems deliver the right amount of water atthe right time when properly programmed and maintained. Efficientirrigation systems• have watering schedules that account for climate and siteconditions, such as: slope, plant type, sprinkler type, soil typeand sun exposure.• operate at correct water pressures according to manufacturerspecifications.• provide uniform water coverage to the landscape.• use appropriate sprinkler types or drip emitters for the irrigatedarea.Plant rightIt’s easy to conserve water by making simple changes to the wayyou plant and manage your landscape:1. Landscape to suit your lot. Choose grasses and plants thathave low water requirements and thrive in your local climate.Consider your lot’s exact features, including sun and shade,dry and damp areas, plant size, and how you plan to use eachsection of your yard.2. Keep soil healthy. Before planting, have the soil tested by theCooperative Extension Service in your state. When planting,turn and cultivate the soil and add soil amendments to improvesoil moisture infiltration and retention. This practices resultsin healthier plants with strong root systems that require lessfrequent watering. It’s also a good idea to aerate your lawn andaround trees at least once a year to improve water penetrationand encourage root growth.3. Mulch plants, shrubs and trees. Using two to four inchesof mulch dramatically decreases evaporation, keeps soiltemperatures moderated, improves water penetration andcontrols weeds that compete for water.4. “Hydrozone” your yard. Grouping plants with similar moistureneeds makes it easier to prevent overwatering in the landscape.Provide separate irrigation zones for lawn and shrub areas thathave different water requirements.5. Plant in spring or fall. Avoid summer planting, since hottemperatures require more water for plants to becomeestablished.6. Save grass for functional areas. Plant grass in play zonesand other areas where it will be used and enjoyed. Instead ofplanting turf on steep slopes or other hard-to-water spaces,consider ground cover, perimeter plants or mulch. Plantturfgrass that is best adapted for your region.7. Plant shade trees. The shade cast by trees creates natural“air-conditioning,” lowering air and soil temperatures, anddecreasing the loss of soil moisture. During the tree selectionprocess, check tree recommendations from your state’sCooperative Extension Service or local water agency.The Homeowner’s Guide to Landscape Irrigation — page 18280 Willow Oaks Corporate Drive, Suite 400 I Fairfax, VA 22031-4507 I Tel: 703.536.7080 I Fax: 703.536.7019 I www.irrigation.orgThe Homeowner’s Guide to Landscape Irrigationk17
The Homeowner’s Guide to Landscape Irrigation — page 28. Maintain your yard regularly. Follow a recommended year-round landscape maintenance schedule for your area. Weed,prune, fertilize and mow as needed. Raise the height of themower during hot months to decrease water evaporation andencourage deeper roots.Invest in an irrigation systemUsing an automated irrigation system is a convenient way to keepyour lawn and landscape beautiful and healthy. When operatedproperly and the correct irrigation components are used, anirrigation system can be very water efficient. A well-planned designis one that is flexible and able to evolve as the landscape matures.Keep the following in mind when considering an irrigation system:1. Hire professionally. Even the best irrigation system won’tperform well if installed incorrectly. When looking to hire adesigner or contractor, always get multiple bids and ask forcertifications, references and insurance certificates. Usea licensed irrigator in states where a license is required orcertified individuals from The Irrigation Association. Go to theIA website to find a certified professional.2. Use components that provide flexibility. Different plantshave different watering needs, and these needs may changeover time. Your system should allow you to apply the rightamount of water for each type of plant by the most effectivemethod.3. Consider drip irrigation. Installed correctly, drip irrigationcan dramatically increase water use efficiency. Do-it-yourselfattempts at conversion from spray irrigation to drip are oftennot successful. Consider contacting a professional irrigationcontractor for drip conversion retrofits.4. Think smart. “Smart” irrigation controllers automaticallyadjust watering amounts and frequency based on rainfall, soilmoisture, evaporation and plant water needs. Several typesare available, including those with on-site sensors or thosewith Wi-Fi connectivity. Smart controllers are smart whenprogrammed correctly. Tomaximize the benefits ofa smart controller, consultwith a professional forcorrect programming of theproduct.5. Look for the WaterSense label and for products thathave been SWAT tested. Purchase smart irrigation controllersthat have the EPA WaterSense label or have been testedby third party agencies through the Irrigation Association’sSWAT program (www3.epa.gov/watersense/product_search.html?Category=5 and www.swatrrigation.org).6. Check water pressure. Low or high pressure seriouslyaffects sprinkler performance. Choose sprinklers based on thewater pressure on your site. Pop-up sprays operate best at30 psi, while residential gear-drive rotors operate best in the40 – 50 psi range. If you have low water pressure, an irrigationprofessional will find the right combination of solutions to waterthe landscape properly.7. Regulate pressure. Excessively high water pressure increasesirrigation output (gallons per minute) by up to 40 percent,causing misting and excessive water runoff. There are severalsolutions to regulating high pressure with the installation of:a pressure-reducing valve for the entire irrigation system,pressure-regulated spray or rotors, and pressure regulators onindividual zone valves. Pressure issues should be handled by aprofessional.8. Buy quality products. Quality components will minimizefuture maintenance and total lifetime cost of your system.Check product warranty, too.9. Meet code requirements. Include the correct backflowprevention device for your area as required by the localPlumbing Code. Backflow prevention devices preventirrigation system water from contaminating the drinkingwater supply.10. Dig deep. Install irrigation pipe deep enough to protect themfrom damage from aeration and other lawn maintenance.Mainline depth will vary according to local practices.11. Don’t mix and match rotors and sprays. Gear-drive rotorsapply approximately one-half inch of water per hour, while fixedspray nozzles apply two to three times that amount. Assure thatnozzles in a zone have matched precipitation rates.www.swatirrigation.org
The Homeowner’s Guide to Landscape Irrigation — page 312. Look for savings. Many water utilities offer rebates for highefficiency nozzles, pressure-regulated sprinkler heads, sprinklercheck valves and smart controllers. Before taking advantageof rebates, consult with a professional irrigation contractor todetermine which products will enhance the efficiency of yourirrigation system.13. Adapt watering to the season. Invest in a smart controllerthat can make changes automatically to the watering schedule.Familiarize yourself with the settings of the irrigation controller.If you choose a “standard knob and dial controller,” learn how tomake percent watering adjustments for each month of the year.14. Get in the zone. Schedule each individual zone in yourirrigation system to account for plant type, type of sprinkler,precipitation rate, sun or shade exposure, slope and soil inthat section. Different zones will almost always need differentwatering schedules.15. Consider soil type. The type of soil determines how quicklywater can be absorbed without runoff. Watering more than thesoil can absorb causes runoff and waste.16. Don’t send water down the drain. Set sprinklers to waterplants, not your driveway, sidewalk, patio or buildings.Consider microirrigation for narrow landscaped areas.17. Water only when needed. Let the soil dry out betweenirrigation events. Watering too much and too frequentlyresults in shallow roots, weed growth, disease and fungus.Take advantage of soil moisture sensors that wire into thecontroller. When approximately 50 percent of the water isdepleted in the root zone, only then will the irrigation run afull cycle.18. Water at the best time. Watering during the heat of the daymay cause losses due to evaporation. Prevent water loss bywatering when the sun is low or down, winds are calm andtemperatures are cool — typically during the very early morninghours before sunrise is the best time.19. Use “cycle and soak.” To reduce runoff, set your system torun for three, 5-minute intervals for 15 minutes at one time,allowing water time to soak into the soil. Shorten cycle timesas needed to keep water on the landscape.Maintain & upgrade your systemIrrigation systems need regular maintenance to keep them workingefficiently year after year. Damage from lawn equipment orimproper winterization can cause leaks and other serious problems.Follow these guidelines to avoid problems:1. Inspect your system monthly. Check for leaks, broken orclogged sprinkler heads, and other problems. Clean cloggedscreens and microirrigation filters as needed.2. Adjust sprinkler heads. Remove or correct obstructionsthat prevent sprinklers from distributing water evenly. Adjustsprinkler head positions and spray patterns to avoid wateringsidewalks or structures and to provide necessary clearanceover growing plants.3. Check the pressure. Pressure can change over time andnegatively affect system efficiency. Use pressure regulationwhen installing microirrigation systems.4. Install rain, freeze or soil moisture sensors. These sensorscan be wired to any controller and help compensate for naturalrainfall by turning off your system in rainy or freezing weatheror when soil is sufficiently wet.The Homeowner’s Guide to Landscape Irrigation — page 3
The Homeowner’s Guide to Landscape Irrigation — page 45. Update your smart controller. Climate or soil moisturesensor-based controllers evaluate weather or soil moistureconditions and then automatically adjust the irrigation scheduleto meet the specific needs of your landscape. For a list ofsmart controllers, check out the EPA WaterSense labeledcontrollers at: www3.epa.gov/watersense/product_search.html?Category=5. SWAT performance reports can be viewed atwww.swatirrigation.org. Some smart controllers have on-sitesensors, while others are signal based and can connect viaWi-Fi technology.6. Consider microirrigation for beds, gardens, treesand shrubs. Drip irrigation, microsprinklers and bubblersapply water at a much slower rate than spray irrigation.Microirrigation decreases evaporation, runoff and overspray.7. Consider subsurface drip irrigation for beds and lawns.Some dripline products are designed to be installed within theroot zone of shrubs or turfgrass. These products apply waterdirectly to the root zone while protecting against root intrusioninto the emission points. An irrigation professional will selectthe right spacing and dripline output for your soil and site.8. Look for savings. Many water utilities offer rebates forcertain water-efficient products. Before upgrading or installinga system, consult with your local water provider.9. Winterize in colder climates. An irrigation contractorwith specialized equipment will blow out water that couldfreeze and crack backflow prevention devices, pipes, valvesand sprinklers.Hiring an irrigation contractorYour irrigation system is only as good as the individual whodesigns and installs the system. This is why it is critical to select acontractor that• has specialized understanding of irrigation principles,technology and techniques.• understands local environmental conditions and can help youchoose low water plants and grass that will flourish in yourclimate and lot.• will ensure your system complies with local building codes forlicensing, backflow prevention, installation and more.• has knowledge of all the different smart irrigation products onthe market and has a willingness to install them.• is willing to train you on how the system works.• provides a plan showing where key components are installed.No matter how small or large your project, always get multiple bids,check references and confirm your preferred vendor is properlyinsured.Find a certified professional for your irrigation project. These includecertified irrigation technician, certified irrigation contractor, certifiedlandscape irrigation auditor or certified irrigation designer. Let yourmotto be: “Hire Certified.”
Not for nothing has Fed Chairman Powell celebrated the “extraordinary times”nthe US economy enjoyed in 2018: growth is on pace to exceed 3%, theunemployment rate is at a 48-year low, and inflation is right on target. As welook ahead to 2019, the natural question is how long the good times can last.Growth is likely to slow significantly next year, from a recent pace of 3½%+ tonroughly our 1¾% estimate of potential by end-2019. We expect tighter financialconditions and a fading fiscal stimulus to be the key drivers of the deceleration.Robust job creation should push the unemployment rate to 3% by early 2020,nwell below our 4½% estimate of full employment, the rate consistent with 2%inflation. Wage growth should reach 3¼-3½% in this environment, and firmerwage pressures coupled with additional tariff rounds should boost core PCEinflation to 2¼% by end-2019. While Fed officials would be comfortable withinflation at that level, we also see a risk of a more material inflation overshoot.The Fed is very likely to raise rates in December, and we expect 4 more hikes inn2019 to bring the terminal funds rate to 3¼-3½%, about two hikes above marketforwards. With a large overshoot of its labor market target under way, theFOMC will likely be reluctant to stop until it is confident that the unemploymentrate is no longer on a downward trajectory, a point we expect to reach only inearly 2020. We still see the risks to our terminal rate forecast as tilted a little tothe upside.History counsels that large labor market overshoots raise recession risk downnthe road. While we take this lesson seriously, we think it is being applied toomechanically in markets today. A flatter and more anchored Phillips curve shouldallow the Fed to unwind the overshoot more gradually, giving it a good chance ofbeating the historical odds. For now, neither overheating risks nor financialimbalances—the classic causes of US recessions—look worrisome. As a result,the expansion is on course to become the longest in US history next year, andeven in subsequent years recession is not our base case.Jan Hatzius+1(212)902-0394 | email@example.comGoldman Sachs & Co. LLCAlec Phillips+1(202)637-3746 | firstname.lastname@example.orgGoldman Sachs & Co. LLCDavid Mericle+1(212)357-2619 |email@example.comGoldman Sachs & Co. LLCSpencer Hill+1(212)357-7621 | firstname.lastname@example.orgGoldman Sachs & Co. LLCDaan Struyven+1(212)357-4172 |email@example.comGoldman Sachs & Co. LLCBrian Chen+1(212)357-8483 | firstname.lastname@example.orgGoldman Sachs & Co. LLCDavid Choi+1(212)357-6224 | email@example.comGoldman Sachs & Co. LLCBlake Taylor+1(202)637-3756 | firstname.lastname@example.orgGoldman Sachs & Co. LLCRonnie Walker+1(917)343-4543 |email@example.comGoldman Sachs & Co. LLCUS Economics Analyst2019 Outlook: The Home Stretch18 November 2018 | 12:03AM ESTInvestors should consider this report as only a single factor in making their investment decision. For Reg ACcertification and other important disclosures, see the Disclosure Appendix, or go towww.gs.com/research/hedge.html.
The Home StretchNot for nothing has Fed Chairman Powell celebrated the “extraordinary times” the USeconomy enjoyed in 2018. GDP growth is on pace to exceed 3%, boosted in part byfiscal stimulus. The unemployment rate has fallen to a 48-year low, and a wide range oflabor market indicators paints a picture of one of the strongest job markets in memory.And after anxiety about “lowflation” last year, core PCE inflation has been remarkably ontarget, within 5bp of 2% for the last five months.On the monetary policy front, the Fed appears very likely to deliver its fourth rate hike of2018 in December, following four tightening actions in 2017 as well. But in contrast to2017, in 2018 the Fed’s policy actions were matched by a large tightening in broaderfinancial conditions, as shown in Exhibit 1.Tighter financial conditions and the fading of the fiscal boost should slow growth fromits recent 3½%+ pace to roughly our 1¾% estimate of potential by end-2019. Butbefore the economy stabilizes, we expect the unemployment rate to fall even furtherbelow target to a bottom of 3% in early 2020. This is well below our 4½% estimate offull employment, and we therefore expect to see faster wage growth and an increase incore inflation to 2¼% by the end of next year. The FOMC is likely to judge it prudent tokeep its foot gently on the brake until it can be confident that the unemployment rate isno longer on a downward trajectory, and we therefore expect four more hikes in 2019 toa terminal rate of 3¼-3½%.For financial markets, this combination of less growth, more inflation, and more ratehikes than priced could be challenging. But a meaningful deceleration next year wouldhelp to reduce the risk of eventually overheating and could ultimately extend the life ofthe expansion.Exhibit 1: In 2018 the Fed’s Rate Hikes Were Matched By a Large Tightening in Financial Conditions98.098.498.899.299.6100.0100.4100.8101.2101.698.098.498.899.299.6100.0100.4100.8101.2101.6Jan-15Jul-15Jan-16Jul-16Jan-17Jul-17Jan-18Jul-18TighterIndexIndexGS US Financial Conditions IndexMar. ’17HikeDec. ’16HikeDec. ’15HikeJune’17HikeSept. ’17Balance SheetNormalizationDec. ’17HikeMar. ’18HikeJun. ’18HikeSept. ’18HikeSource: Goldman Sachs Global Investment Research18 November 20182Goldman SachsUS Economics Analyst
The Economic Outlook for 2019: Less Growth, More InflationThe tightening in financial conditions and the fading of the fiscal stimulus are the keydrivers of the growth deceleration we expect next year. Our estimate of the sum of thegrowth impulses from these two factors declines from a ¾pp boost in 2018Q3 to a ½ppnet drag by mid-2019, as shown in Exhibit 2.The slowdown should come gradually, with growth remaining above trend in the firsthalf of 2019 before slowing to its potential pace later in the year (Exhibit 3). Theeconomy’s recent performance has been stronger than the fiscal and financial impulsesalone would suggest, and some of this additional self-sustaining momentum shouldpersist next year.We expect consumption growth of about 2½% in 2019, supported by solid incomegrowth, a high saving rate, and high confidence. We project business investmentgrowth of about 4%, supported by strong demand growth, fairly easy credit conditions,and healthy business confidence. Strength in these areas should be only partly offsetby drags from net trade and continued weakness in the housing sector.While further escalation of trade tensions with China appears likely, we have foundminimal effects on the US economy so far and the next steps should have only amodest impact on growth unless they affect US business confidence and risk assetsmuch more adversely than the trade war has to date.Exhibit 2: Tighter Financial Conditions and a Fading Fiscal Boost Should Drive Growth Lower in 2019-2.0-1.5-1.0-0.50.00.51.01.52.0-2.0-1.5-1.0-0.50.00.51.01.52.0Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q42014201520162017201820192020Financial ConditionsFiscal PolicyTotalEffects on Real GDP Growth, 3-Quarter Centered Moving AveragePercentage pointsPercentage pointsAssumes GS FCI remains constant at November 15 close.Source: Goldman Sachs Global Investment Research18 November 20183Goldman SachsUS Economics Analyst
With growth likely to remain above potential a while longer, the impressive recentmomentum in job creation is likely to fade only gradually. Monthly payroll growth hasaveraged 215k over the last six months, and our statistical models suggest that it isunlikely to slow to our 90k estimate of the breakeven pace—the pace needed tostabilize the unemployment rate—until early 2020 (Exhibit 4, left). By then we expectthe unemployment rate to have declined to 3%, well below our 4.5% estimate of thefull employment rate consistent with the Fed’s 2% inflation target (Exhibit 4, right).Other indicators support this picture of one of the strongest labor markets in memory.The number of job openings per unemployed worker, the quit rate, household reports ofthe ease of finding a job, and employer reports of the difficulty of finding workers allsuggest that workers’ bargaining power has increased. Based on these signals, recentExhibit 3: We Expect Growth to Slow from 3½%+ Recently to a Trend-Like Pace by Late 2019-10-8-6-4-202468-10-8-6-4-202468200620082010201220142016201820202022Real GDP GrowthCurrent Activity IndicatorPercent change, annual ratePercent change, annual rateGS PotentialGrowth EstimateGS ForecastSource: Department of Commerce, Goldman Sachs Global Investment ResearchExhibit 4: Above-Trend Job Creation Is Likely to Push the Unemployment Rate to 3% by Early 202005010015020025030005010015020025030020132014201520162017201820192020Thousands per monthThousands per monthNonfarm Payroll GrowthGS Estimate ofMonthly Breakeven RateGS Forecast02468101202468101219501960197019801990200020102020PercentPercentUnemployment RateGS ForecastGS Estimateof LevelConsistentwith 2%InflationSource: Department of Labor, Goldman Sachs Global Investment Research18 November 20184Goldman SachsUS Economics Analyst
acceleration in the highest-quality wage indicators, the rise in our wage survey leadingindicator, and the larger pick-up in wage growth in the more cyclically-sensitive lowerhalf of the income distribution, we expect overall wage growth to reach 3.25-3.5% nextyear.Core PCE inflation is likely to grind higher next year as well. While recent inflationreadings have been soft, we expect to reach 2¼% by end-2019. Measures of theunderlying inflation trend have risen, and in the year ahead pass-through from firmerwage growth, bottlenecks and capacity constraints in product markets, additional tariffrounds with a greater focus on consumer goods, and new state-level online sales taxesshould all put upward pressure on core inflation.While Fed officials would be comfortable with inflation at that level, we also see somerisk of a larger overshoot to 2.5% or higher in the years ahead, a level that would likelychange the monetary policy conversation. Part of the reason is simply that inflation riskis always higher than it seems. While this statistical uncertainty is a two-sided risk, wealso see upside risks from trade war escalation beyond our baseline, such as theimposition of auto tariffs, and from the possibility suggested by our analysis of city-leveldata that extremely tight labor markets can and often do push inflation notably, not justslightly, higher.Exhibit 5: Firmer Wage Pressures and Higher Tariffs Should Boost Core PCE Inflation to 2¼% by End-2019Note: Tariff chart shows estimated impact on core PCE inflation; however, we estimate an impact of a similar magnitude on the core CPI measure.Tariffs already imposed include those on solar panels, washing machines, steel, aluminum, and $250bn of Chinese imports; our base case involves an increase in the tariff rate from 10% to25% on $200bn of Chinese imports as well as a new 10% tariff on the remaining $267bn of Chinese imports. While not our base case, a 25% tariff rate on this $267bn and/or on the majority ofthe $340bn of global auto-sector imports are also possible from the administration (represented in the gray area above).012345601234561991199419972000200320062009201220152018GS Wage TrackerGS Lower-Income Wage TrackerPercent change, year agoPercent change, year ago0.000.050.100.184.108.40.2060.350.400.000.050.100.220.127.116.110.350.40JanAprJulOctJanAprJulOctEstimated Tariff Impact on Core InflationAll Floated TariffsGS Base CaseImposed to DatePercentage points, year-on-yearPercentage points, year-on-year2018China $267bnat 25%Autos Tariffs2019Source: Goldman Sachs Global Investment Research18 November 20185Goldman SachsUS Economics Analyst
The Fed in 2019: The Home Stretch of the Hiking CycleWe expect the Fed to deliver a rate hike in December followed by four hikes in 2019,about two more than priced. This would bring the terminal funds rate to 3¼-3½% andmark the third straight year in which the Fed surprised markets in a hawkish direction.In 2017 investor skepticism about rate hikes centered on the lowflation narrative, theweight the FOMC was likely to put on low inflation versus a tight labor market, and thelevel of the neutral rate. In 2018 investor skepticism centered on the idea of the neutralrate as a barrier, an assumed fear of yield curve inversion, and concern about foreignand especially EM vulnerability to Fed hikes. As we enter the home stretch of the hikingcycle in 2019, investor skepticism has so far centered on whether four hikes are reallynecessary for an economy already on a trajectory to decelerate substantially.The next three hikes up to the Fed’s 3% estimate of the neutral rate (Exhibit 6) appearlikely to be fairly uncontroversial, barring a significant shock. Recent commentary byFed officials indicates that most think that an accommodative stance is inappropriate ata time when the economy is past their labor market target. The controversy is likely tobegin beyond 3%.Many investors find it instinctively implausible that the Fed would take the policy ratebeyond neutral. But since last December FOMC participants have overwhelminglyprojected that a terminal rate modestly above neutral will be an appropriate response tothe labor market overshoot. And compared to standard benchmarks such as the“balanced approach” Taylor rule included in the Fed’s Monetary Policy Report, taking thefunds rate a hike or two above neutral actually looks very restrained (Exhibit 7).Exhibit 6: Most FOMC Participants Now Agree that an Accommodative Policy Stance Is Inappropriate0.00.20.40.60.81.01.21.41.61.82.00.00.20.40.60.81.01.21.41.61.82.0ConsensusBlue ChipPrimaryDealersLewis,Vazquez-Grande(2017)Lubik,Matthes(2015)Del Negroet al (2017)Laubach,Williams(2015)**Johannsen,Mertens(2016)Holston etal (2017)Kiley(2015)FederalReserveAverageEstimateForecastersModelsPercentPercentLatest Estimates of Real rSource: Consensus Economics, Blue Chip, Federal Reserve Bank of New York, Federal Reserve Board, Goldman Sachs Global Investment Research18 November 20186Goldman SachsUS Economics Analyst
We think the question of when the hiking cycle ends largely comes down to when Fedofficials can be confident that the overshoot of full employment already under way is atleast not growing further, the same principle that determined the endpoint in the lastfew hiking cycles. The recent sharp tightening in financial conditions has made it moreplausible that this point could be reached earlier than the end of next year, but we thinkit is more likely that job growth will not slow sufficiently until early 2020. If so, theFOMC is likely to judge it prudent to continue tightening gradually, for fear of having totighten more abruptly down the road. This has been the Committee’s guiding principlefor the last couple of years.Exhibit 8 illustrates a few possible alternative scenarios around our baseline. If GDPgrowth and job creation slow earlier than we expect, the Fed could stop after two hikesnext year at 2.75-3%, say. Conversely, if job growth remains stronger for longer thanwe expect or inflation rises to 2.5% or higher, the path of least resistance would likelybe to continue hiking once per quarter into 2020. While many scenarios are possible,we see the risks to our baseline terminal rate as still tilted a little to the upside.Exhibit 7: A Modest Overshoot of Neutral Would Actually Be Quite Tame Relative to Standard Benchmarks-10-8-6-4-20246810-10-8-6-4-2024681020002002200420062008201020122014201620182020Actual Target RateYellen’s Taylor Rule with HLW rYellen’s Taylor Rule with SEP Longer Run rPercentPercentFed Funds RateGS ForecastSource: Goldman Sachs Global Investment Research18 November 20187Goldman SachsUS Economics Analyst
Beyond the number of rate hikes, three other monetary policy issues will be importantin 2019.First, the end of balance sheet normalization will come into sharper focus. Our bestguess remains that runoff will end with bank reserves at roughly $1tn and a totalbalance sheet of about $3.6tn in early 2020, though a wide range of outcomes ispossible. While we sympathize with arguments that the benefits of keeping the balancesheet somewhat larger than its minimum possible size exceed the costs, the Fed’sstanding guidance, reiterated in Congressional testimony by Chairman Powell in July, isthat the “balance sheet will return to a size that’s no larger than it needs to be for us toaffect monetary policy in our chosen framework,” and that point looks a bit further off.Second, the FOMC will likely have to make further IOER realignments. With theeffective fed funds rate now just 5bp below the top of the target range for the fundsrate, we expect the FOMC to raise IOER by only 20bp at its December meeting and tomake one or two additional IOER realignments in 2019.Third, a press release from the Fed issued yesterday announced that the debate onalternative monetary policy frameworks has resumed. We expect the next milestone tobe a summary of a staff presentation in the minutes to one of the upcoming FOMCmeetings. The key event in 2019 will then be a conference on June 4-5 that will invitediscussion from both within and outside of the Federal Reserve.Exhibit 8: We See the Risks Around Our Baseline Terminal Rate As Two-Sided but Tilted to the Upside0.01.02.03.04.05.06.00.01.02.03.04.05.06.0Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4201820192020Inflation Above 2.5% in 2020Payrolls Stronger for LongerGS BaselineLabor Market Stabilizes mid-20192020 RecessionPercentPercentScenarios for the Fed Funds RateSource: Goldman Sachs Global Investment Research18 November 20188Goldman SachsUS Economics Analyst
Beating the Historical Odds: Recession Risk in 2019 and BeyondWe have long highlighted the risks that have historically been associated with largeovershoots of full employment. We have noted that the Fed has never engineered asoft landing from beyond full employment, that few other advanced economy centralbanks have either, and that countries that have achieved very long expansions oftenused countercyclical policy to prevent a large overshoot in the first place. In practice ithasn’t been easy to nudge up the unemployment rate just so.While we take this lesson seriously, we think it is being applied too mechanically bymarket participants today. The key difference with the past is that the Phillips curve isflatter and better anchored on the Fed’s target today. As a result, where labor marketovershoots once led to high and accelerating inflation and consequently had to beunwound urgently with a forceful policy response, today an overshoot will more likelymean inflation persistently but only moderately above target. The Fed could probablylive with this for a while, permitting it to tighten gradually and unwind the overshootslowly. This gives the Fed a good chance of beating the historical odds.How worried should we be about recession risk today? The history of US recessionspoints to two classic causes of US recessions, overheating and financial imbalances.While overheating risks could emerge down the road, they look quite limited for now:core inflation is at 2%, trend unit labor cost growth is at 2%, and both householdinflation expectations and market-implied inflation compensation are below average(Exhibit 9).We also see little risk from financial imbalances at the moment. At a high level, theprivate sector financial balance—a very good predictor of recession risk—looks quitehealthy (Exhibit 10).Digging deeper, our financial excess monitor looks for elevated valuations and stretchedrisk appetite across major asset classes, and for financial imbalances and vulnerabilitiesExhibit 9: Overheating Risks Look Limited for Now-1.5-1.0-0.50.00.51.01.52.02.53.0-1.5-1.0-0.50.00.51.01.52.02.53.0199519992003200720112015Core PCE InflationTrend Unit Labor Cost GrowthPercent change, year agoPercent change, year ago2%*GS Wage Tracker minus 3 year average productivity growth1.01.52.02.53.03.51.01.52.02.53.03.51995199920032007201120155y5y TIPS Inflation CompensationMichigan 5-10 Year Household Inflation Expectations, 3mAvg.PercentPercentSource: Department of Commerce, Federal Reserve Board, University of Michigan, Goldman Sachs Global Investment Research18 November 20189Goldman SachsUS Economics Analyst
in the household, business, banking, and government sectors. Overall, the message ismostly reassuring. On the valuations side, while commercial real estate prices looksomewhat frothy, lending terms and standards have tightened in recent years. On thesectoral imbalances side, fiscal sustainability remains a long-run concern, but we seethis less as a recession trigger than as something that could prolong a downturn ifpolicymakers perceive a lack fiscal space to respond.These two classic recession risks are complementary—overheating and the associatedrisk of a more abrupt shift in monetary policy is more threatening when financialimbalances are elevated and less threatening when they are limited. With neither risklooking worrisome at the moment, we do not think it makes sense to characterize theeconomy as “late cycle” at this point.The most obvious recession risk beyond 2019 is a mundane and technical one. With alow potential growth rate and a possible need to operate the economy a touch belowpotential to gradually unwind the overshoot—we forecast 1.5% growth in 2020 and2021—the likelihood that normal fluctuations will tip growth negative is mechanicallysomewhat higher. We would interpret this as simply highlighting the arbitrariness ofdefining recessions as negative growth, rather than as a material rise in theunemployment rate. Of course, even a less severe recession could see a large sell-offin risk assets.Accounting for these and other considerations, our recession risk model indicates thatrecession risk is still quite low (Exhibit 11). The expansion is therefore on course tobecome the longest in US history next year, and even in subsequent years recession isnot our base case.Exhibit 10: The Private Sector Financial Balance Looks Healthy, a Key Contrast with the Last Two Cycles-6-4-2024681012-6-4-2024681012196019651970197519801985199019952000200520102015Percent of GDPPercent of GDPPrivate Sector Financial BalanceSource: Federal Reserve, Department of Commerce, Goldman Sachs Global Investment Research18 November 201810Goldman SachsUS Economics Analyst
David MericleJan HatziusExhibit 11: With No Obvious Trigger on the Horizon, Recession Risk Still Looks Low0102030405060708090100010203040506070809010019901994199820022006201020142018US Recession RiskNext YearNext 2 YearsNext 3 YearsPercentPercentSource: Goldman Sachs Global Investment Research18 November 201811Goldman SachsUS Economics Analyst
Economic Releases and Other EventsTimeDate(EDT)IndicatorGSConsensusLast ReportMonNov 1910:00Homebuilders’ Survey (Nov)n.a.6868TueNov 208:30Housing Starts (Oct)+2.7%+2.4%-5.3%WedNov 218:30Durable Goods Orders (Oct)-3.5%-2.2%+0.7%8:30Durable Goods Orders Ex-Transport (Oct)+0.1%+0.4%Flat8:30Core Capital Goods Orders (Oct)+0.1%+0.2%-0.1%8:30Core Capital Goods Shipments (Oct)+0.4%+0.2%-0.1%8:30Initial Jobless Claims215,000215,000216,0008:30Continuing Claimsn.a.1,650,0001,676,00010:00Leading Indicators Index (Oct)n.a.+0.1%+0.5%10:00Existing Home Sales (Oct)-0.3%+1.0%-3.4%FriNov 2310:00UMich Consumer Sentiment—Final (Nov)97.998.398.3EstimateSource: Goldman Sachs Global Investment Research18 November 201813Goldman SachsUS Economics Analyst
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Office of CommunicationsEMBARGOED UNTIL 11:00AM July 17, 2017News ReleaseJuly 17, 2017DHS Provides Relief to American Businesses in Danger of Suffering Irreparable HarmAdditional Visas for Temporary Workers Provided Until End of Current Fiscal YearWASHINGTON — U.S. businesses in danger of suffering irreparable harm due to a lack ofavailable temporary nonagricultural workers will be able to hire up to 15,000 additionaltemporary nonagricultural workers under the H-2B program under a final rule that theDepartments of Homeland Security and Labor submitted to the Federal Register today. Toqualify for the additional visas, petitioners must attest, under penalty of perjury, that theirbusiness is likely to suffer irreparable harm if it cannot employ H-2B nonimmigrant workersduring fiscal year (FY) 2017.After consulting with Secretary of Labor Alexander Acosta, Secretary of Homeland SecurityJohn Kelly determined there are not enough qualified and willing U.S. workers available toperform temporary nonagricultural labor to satisfy the needs of some American businesses in FY2017.“Congress gave me the opportunity to provide temporary relief to American businesses in dangerof suffering irreparable harm due to a lack of available temporary workers,” said DHS SecretaryJohn Kelly. “As a demonstration of the Administration’s commitment to supporting Americanbusinesses, DHS is providing this one-time increase to the congressionally set annual cap.”The H-2B Temporary Nonagricultural Worker program was designed to serve U.S. businessesunable to find a sufficient number of qualified U.S. workers to perform nonagricultural work of atemporary nature. Congress set the annual H-2B cap at 66,000. A maximum of 33,000 H-2Bvisas are available during the first half of the fiscal year, and the remainder, including anyunused H-2B visas, is available starting April 1 through September 30. On March 13, 2017,USCIS received sufficient H-2B petitions to meet the full FY 2017 statutory cap of 66,000. InMay, Congress delegated its authority to the Secretary to increase the number of temporarynonagricultural work visas available to U.S. employers through September 30. The Secretarytook the intervening time to consult with the Secretary of Labor on the issue and to properlydevelop this rule in accordance with Congressional requirements.
Office of CommunicationsStarting this week, eligible petitioners for H-2B visas can file Form I-129, Petition for aNonimmigrant Worker and must submit a supplemental attestation on Form ETA 9142-B-CAAwith their petition. A new tip line to report general H-2B abuse and employer violations has alsobeen established.Details on eligibility and filing requirements will be available in the final rule and on a newuscis.gov webpage to be published when the final rule is posted for public inspection. This pagewill also include information on how individuals can report abuse in the program.If members of the public have information that a participating employer may be abusing thisprogram, DHS invites them to submit information to ReportH2BAbuse@uscis.dhs.gov.For more information on USCIS and its programs, please visit www.uscis.gov or follow onTwitter (@uscis), YouTube (/uscis), Facebook(/uscis), and Instagram (@USCIS).###