By Michael Degan, Editor
The National Fluid Power Association’s second quarter Company Market Outlook report shows an uptick in some sectors of the U.S. economy, but it notes that “the economy is not out of the woods yet.”
“There are some encouraging signs,” said the report, compiled for NFPA by ITR Economics. “The U.S. is at least partially open for business, and monthly data has ticked up for the industrial and retail sectors.”
While it’s not news that the COVID-19 pandemic affected every sector of the economy, not all were hurt.
“Although some companies prospered,” the report said, “the majority were negatively impacted.”
The report noted some positive findings.
“The current downturn was caused by a natural disaster and not by economic fundamentals, which has important implications for the subsequent recovery trend. U.S. consumers were in a better position pre-pandemic than they were before the Great Recession. The U.S. unemployment rate was at a nearly 50-year low before spiking up to double digits due to government-mandated business closures. U.S. disposable personal income was at a record high in April, assisted by government stimulus measures; during a recession we usually see decline in income. Even more encouraging is that the U.S. personal savings rate spiked to record highs, signaling that consumers were able to set aside part of the stimulus money.”
These factors led ITR to express “measured optimism. Recovery will be gradual as uncertainty fades and budgets rebalance.”
ITR expects the decline in annual industrial production to come in at about 13.3%, slightly less than experienced during the Great Recession of 2007-2009.
“Annual production will reach a low in early 2021 and then rise through at least 2022. Production in 2022 is expected to come in about 2.5% lower than the August 2019 peak, meaning we likely will not have a full recovery until 2023 or later.”
But just as the situation with the pandemic remains fluid, ITR’s projections reflect the uncertainty of the coming months and years.
“The most significant risk factor to our forecasts,” the report said, “is the potential for renewed stay-at-home orders, resulting from a second wave of infections.”
NFPA members can download the report at https://nfpahub.com/stats/info-category/nfpa-forecast-report-u-s-customer-markets/.