Lest there be any doubt, the most important data and trends affecting the U.S. economy at the present time pertain to the recent, rapid and nationwide surge in COVID-19 cases. There is not much more I can add about this except to say that a solution to this crisis is most certainly on the way, and I believe our imminent victory over this version of the coronavirus will be total.
Sadly, I expect the death toll to rise for a few weeks before it eventually collapses; therefore, we owe it to our families and ourselves to maintain vigilance and not ignore the risks for just a while longer. There is no "one size fits all" strategy here, but rational adults can manage this for themselves without politicizing it.
I also believe the economy will get another infusion of relief funding from Congress sometime in the next quarter. This will definitely become politicized, so there is also some risk to this expectation. Thus, I am not sure of the size and scope, but I am including another round of some kind of funding in my base case forecast for the macroeconomy in 2021.
So, what does this mean for the plastics industry in the coming year? To start, I am pleased to report the recently released figures from the Federal Reserve indicate U.S. output of plastics products posted a small increase in October when compared with the same month a year ago. The October index for industrial production of plastics products was 112.0, which is just a tad higher than 111.9 registered last year.
Now the data will be revised several times, so it is possible this gain will be erased. But if it holds, the October figure marks the first time in 16 months this index of monthly production posted a year-over-year gain. The COVID crisis can be blamed for declines during the past eight months, but the plastics industry was experiencing a period of moderate cyclical decline before the crisis hit. I am not prepared to declare the industry is now "fully recovered," but I can say that after hitting bottom in April, the trend in this data has exhibited a V-shape. Nevertheless, there are some companies in certain segments that continue to struggle.