While inflation is still too high for the Fed’s liking, meaning it’s still too early to say the U.S. economy has achieved a soft landing, there are some signs of better times ahead for the North American plastics industry.
In the March Numbers that Matter livestream, Plastics News Economics Editor Bill Wood talked about what he’s seeing in plastics data. Watch the recording below.
“The plastics industry remains in a recession. I’m hoping that I can say with some, with a little bit more conviction that it’s in a late, late stages of a recession, which transitions to early stages of recovery,” Wood said.
“So it’s possible — very possible now — that I can say we are in the late stages of a contraction in the plastics industry output and just a month or two of transitioning into early stages of growth,” Wood added. “And growth will be gradual at the beginning and then start to pick up as the trend continues.”
Ideally, that could mean the plastics industry will be in an upswing when the Fed starts to lower interest rates later this year, which will be good news for rate-sensitive markets like residential construction.
Wood added that the Fed is still concerned because inflation is still not under control.
“They’ve raised their expectation for where they think inflation will be at the end of this year. And in fact, the level they are now projecting inflation to be at at the end of 2024 is still higher than the 2 percent target,” Wood said.
Pent-up demand since the pandemic is helping the automotive market to stay strong, Wood said. And pent-up demand since the housing bubble in 2009 is helping residential construction, even though that market still faces many challenges.
“we need several years in a row of good housing starts numbers to get back to where we are meeting — fully meeting — the demand. But you have to start somewhere,” Wood said.
The next Numbers that Matter Live is scheduled for April 23.