Ever been on a flight where the descent from cruising altitude to the ground seems to last forever? That's the status of the U.S. economy now, with promises of a "soft landing" on inflation that hasn't yet arrived.
"The data is not cooperating," Plastics News Economics Editor Bill Wood said during the Feb. 27 Numbers That Matter Live webinar. "We are not yet landed."
While inflation, consumer spending and other statistics looked good late in 2023, results at the start of 2024 "came in hot," Bill said, "hotter than expected or wanted."
The U.S. inflation rate was 3.1 percent for the 12 months leading up to January, which is down from a year earlier but still higher than the Federal Reserve's target of 2 percent. And policymakers at the Fed aren't going to do anything to change interest rates until they reach "more certain" numbers.
As long as interest rates remain high, consumers will be less likely to invest in cars, new construction and home renovations, and big-ticket appliances.
"Plastics is clearly under stress as a result of high interest rates, but inflation is not yet under control," Bill said.
Numbers due out this week may help determine how much longer a landing will take. On Feb. 29, the Bureau of Economic Analysis will release the Personal Consumption Expenditures rate — a preferred inflation report — while March 1 will see automakers begining to release sales data for February.
Bill also discussed the potential impact of an underperforming economy in China as part of the webinar. PN subscribers can watch the full discussion here.