Economist Peter Mooney thinks both thermoforming segments — industrial and packaging — will show about 6 percent annual growth through 2014, but he warned that storm clouds could derail what he called an “anemic recovery” from the Great Recession.
Mooney delivered an Economics 101 keynote speech Sept. 19 at the Society of Plastics Engineers 2011 Thermoforming Conference in Schaumburg. His message was stark for the U.S. economy: The government and consumers got used to an unsustainable level of spending, and now it will take years of paying down debt and raising incomes — and tax revenues — to get back to normal.
“Here in September 2011 we're still in the long, slow recovery phase from a very serious recession. Measurable, meaningful expansion has yet to appear,” Mooney said.
Normally, following such a severe recession, the U.S. economy should have bounced back 7-8 percent for several quarters. Instead, the economy recovered by less than 4 percent for the first three quarters of 2010, and then the level of growth fell off.
“Growth over the first half of 2011 averaged an anemic 0.7 percent,” Mooney said.
Mooney, president of Plastics Custom Research Services, gave a more upbeat near-term forecast for thermoformers.
Industrial thermoforming — heavy-gauge products for markets such as appliances, automotive and construction — got hit hard during the recession. That was followed by a rebound of 6.1 percent in 2010 that recovered about 40 percent of the sales lost over 2008-09 downturn, he said.
“I project 6.5 percent annual growth of the industrial thermoformers' sales from 2011 to 2014,” Mooney said. The total breaks down to 4 percent in volume growth and 2.5 percent in value.
The thin-gauge packaging side only had a small decline in 2009.
“In 1990 growth resumed at a very acceptable 6.5 percent rate. I believe sales of thermoformed packaging will continue to grow at around 6 percent out to 2014, split between 3 percent volume growth and 3 percent inflation,” he said.
Analyzing Plastics News ranking data, Mooney also examined changes in the ratio of labor to capital from 2000-10, as measured by the number of employees divided by the number of thermoforming lines.
During that decade, the labor/ capital ratio for packaging thermoformers increased by 1.9 percent. “This reflects the fact that there was an increase in the number of employees exceeding the increase in the number of forming lines,” Mooney said.
By contrast, the labor/capital ratio for industrial thermoformers plunged by 16.5 percent. “Here the number of employees declined over the past decade while the number of forming lines rose,” he said.
Mooney noted that productivity helps to grow a nation's wealthy. But he spelled out a disconnect: Throughout the 2000-10 period, American consumers were spending and borrowing more than they could afford.
“We were spending on lifestyles as if our real [gross-domestic product] was growing at 3-4 percent, whereas … it only grew on average by 1.7 percent,” he said.
U.S. productivity increased an average of 2.5 percent a year from 1950-70. From 1970-90, the growth rate declined to 2 percent. From 1990-2010 it fell further, to annual improvement of 1.5 percent.
Mooney called jump-starting productivity growth “the core challenge confronting our nation's leaders and the U.S. business economy.”
GDP will have to grow much faster — 3 percent, 4 percent or more — to spur job creation and lower the unemployment rate, which currently is about 9 percent.