Moving Forward…

We’ve heard enough. Recession, recession, recession, yada, yada, yada…it’s like a Seinfeld routine. Let’s focus on the nearterm future. First quarter GDP came in at 1.1% growth. The U.S. GDP for 2022 was 425.46 trillion, so 1.1% growth is more than 250 billion dollars. The U.S. has averaged 3.13% growth year-over-year since 1948, despite the occasional recession.

“Current-dollar GDP increased 9.2%, or $2.15 trillion, in 2022 to a level of $25.46 trillion, compared with an increase of 10.7 % or $2.25 trillion, in 2021.” -- Bureau of Economic Analysis, U.S. Government.

Manufacturing purchasing is softer because manufacturers are burning off excess inventory purchased during the latest boom. This has caused a bit of a raw material demand slump. We expect that to continue in most sectors through the second quarter and into Q3 2023. By then, unless the economy has weakened considerably, manufacturers’ inventory levels will be too low, and purchasing demand will rise. Forecasts of GDP for 2023 range between 1.0 and 2.5% growth – hardly a recession.

The University of Michigan Consumer Sentiment Index unexpectedly rose to 63.5 in April of 2023 from 62.0 in March. Inflation is cooling but not yet down to 2% or less, as price increases soften in most sectors of both manufacturing and services. The consumer continues to buy because unemployment is at 3.5%, with few signs of a dramatic rise. Although major corporations are adjusting headcounts downward to respond to reorganizations, new efficiencies, or adverse market conditions in their sector, overall employment conditions remain solid. Manufacturing, in particular, continues to hang on to skilled employees who were difficult to find and expensive to train, and are more likely to weather the year than dramatically reduce headcount unless market demand were to retreat significantly.

Feeling better yet? Short of an awful “Black Swan” event, the U.S. economy continues to expand modestly but earnestly. And the reconfiguration of supply chains by astute supply chain managers and staff has removed much of the volatility from previous sourcing. We continue to see jobs and strategic industries returning to America, such as microprocessor chip manufacturing from design through production to domestic supply. Much of this capacity will come online in 2024.

We expect similar progress in solar panel research, development, and manufacturing in the U.S. China is the dominant supplier. Although it was hit with tariffs, it maneuvered around them by doing assembly in other Southeast Asian countries. Key to U.S. production will be innovations in panel components, and this month we introduce a new Outlook section in Manufacturing Outlook called Graphene Outlook. Spoiler Alert – that article is worth the read, so I’m not going to give anything away here.

Manufacturing Outlook continues to grow its subscriber base rapidly as the only industrial publication discussing forwardlooking, forward-thinking topics relevant to the manufacturing industry, from raw material suppliers to industrial buyers of assemblies and component parts, as well as consumers of retail goods. So, although the mainstream media makes its living from doom, gloom, and negative commentary, Manufacturing Outlook presents the upbeat side of a hope-filled future.

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Lewis A. Weiss, Publisher Contact laweiss@mfgtalkradio.com

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