It’s scary out there. Inflation is soaring. Interest rates are rising. And gas prices are climbing faster than summer temperatures. Is it time to hide under a rock and hope for the best? No!
At AMT – The Association For Manufacturing Technology we like to deal in facts – not fear. The truth is that in the manufacturing technology sector there is no reason to panic. Based on presentations at the MFG Meeting 2022, here are three economic realities to understand now as you plan for the future.
1. The economy is still growing, just slower than before. The U.S. Gross Domestic Product (GDP) will continue to grow through 2024 despite the numerous challenges the economy has faced, according to Alan Beaulieu, Ph.D., the president of ITR Economics. The U.S. Industrial Machinery Production Index is the highest it has been in 14 years, and it is expanding, but at a slower rate than before.
One of the reasons for this economic deceleration that will likely continue through 2023 is the end of the federal stimulus dollars that were flowing into the economy early in the pandemic. The good news? The consumer savings level is still slowly growing. That means consumers are still spending, but they are being more cautious with their spending.
2. Recession is not imminent. While some economists are now predicting a recession, Beaulieu does not foresee a major economic slump on the horizon. While there may be small dips, the 2020s are shaping up to be a time of solid growth and recovery. All indicators point to solid consumer financial health, complete with rising incomes. Likewise, businesses are profitable, and liquidity remains high. In fact, the economic situation in the United States is better than Europe, so focusing more heavily on domestic opportunities may be a wise option, Beaulieu noted.
3. U.S. demographics are a positive indicator for future growth. During his MFG presentation, internationally respected demographer and author Ken Gronbach emphasized the importance of younger generations to economic strength and growth. According to data from the U.S. Census Bureau, the Millennial generation includes 82 million people, while Generation Z includes 86 million people. Both generations are significantly bigger than the Baby Boom generation.
Born between 1982-1999, Millennials are currently coming of age. They are already, or will be, seeking homes and establishing their lives. In addition to homes, they will be purchasing cars, appliances, gadgets, and more. Growth in the consumption of consumer goods means growth in manufacturing.
The large U.S. population of young people is significant, especially when compared with the aging populations in both China and Russia, Gronbach explained. Millennials will keep domestic manufacturing going strong in the United States. Meanwhile, countries like China are in trouble because of significant people shortages. They don’t have enough workers or buyers in their rapidly aging populations to support economic growth.
“The overall economic message is definitely a positive one, despite the fact that most experts are expecting a small dip between late 2023 and mid-2024,” explained AMT Chief Knowledge Officer Pat McGibbon. “The situation in North America looks positive for the next four or more years from a political, economic, and demographic position. There is money in the system. There is demand. There are young people. This leads to a stable economy that is trending upward.”
For more vital economic content, plan to attend IMTS 2022 in September, which will feature an Investor Forum and a Smarter Sourcing Symposium. In October 2022, access up-to-the-minute economic information at MTForecast. You can also tap into the latest U.S. Machine Tool Orders information online any time.