Chicago — If slow and steady really does win the race, then the U.S. plastics market and the economy in general are in good shape.
"We're in a stable, low-volume environment," Plastics News economics editor Bill Wood said June 9 at the Plastics News Financial Summit in Chicago.
U.S. plastics production is at 90 percent of its pre-recession peak, according to Wood, and is steadily rising, even if current growth is "just above zero."
U.S. gross domestic product growth is averaging 2 percent annually.
"Some say that's not good enough, some say they'll take it," Wood said. "It should go up a little bit in the next 12 to 18 months.
U.S. markets for durable goods and motor vehicles also are seeing low growth. "We're no longer selling vehicles at a record pace," Wood added.
Retail sales outside of auto, however, are starting to rise. "Retail is getting back to 4 percent growth, which should create more of a tailwind for plastics," he said.
U.S. housing starts also are growing, but remain 40 percent down from their pre-recession peak. "Housing used to be a leading indicator, but not in this economy," Wood explained. Even so, he said that he expects housing to expand further, with annual growth of 5 percent.
The U.S. appliance market also "looks like it's starting to recover," with growth of 5 percent.
"There's still significant slack in the labor market, but it will continue to improve gradually," he said, adding that interest rates and inflation should stay close to their current levels.
"Economic growth in the U.S. will stay in the 2 to 2.5 percent range for the near future, and plastics demand will be in the same range," Wood said. "We've got steady, predictable growth. But long-term, it looks like we're stuck in a short-term, consumption-based business cycle.
"There's been a chronic lack of investment and saving, and that's caused substantial reduction in capital formulation."