Skip to main content
Sister Publication Links
  • Sustainable Plastics
  • Rubber News
Subscribe
  • Sign Up Free
  • Login
  • Subscribe
  • News
    • Processor News
    • Suppliers
    • More News
    • Digital Edition
    • End Markets
    • Special Reports
    • Newsletters
    • Resin pricing news
    • Videos
    • Injection Molding
    • Blow Molding
    • Film & Sheet
    • Pipe/Profile/Tubing
    • Rotomolding
    • Thermoforming
    • Recycling
    • Machinery
    • Materials
    • Molds/Tooling
    • Product news
    • Design
    • K Show
    • Mergers & Acquisitions
    • Sustainability
    • Public Policy
    • Material Insights Videos
    • Numbers that Matter
    • Automotive
    • Packaging
    • Medical
    • Consumer Products
    • Construction
    • Processor of the Year
    • Best Places to Work
    • Women Breaking the Mold
    • Rising Stars
    • Diversity
    • Most Interesting Social Media Accounts in Plastics
  • Opinion
    • The Plastics Blog
    • Kickstart
    • One Good Resin
    • Pellets and Politics
    • All Things Data
    • Viewpoint
    • From Pillar to Post
    • Perspective
    • Mailbag
    • Fake Plastic Trees
  • Shop Floor
    • Blending
    • Compounding
    • Drying
    • Injection Molding
    • Purging
    • Robotics
    • Size Reduction
    • Structural Foam
    • Tooling
    • Training
  • Events
    • K Show Livestream
    • Plastics News Events
    • Industry Events
    • Injection Molding & Design Expo
    • Livestreams/Webinars
    • Editorial Livestreams
    • Ask the Expert
    • Plastics News Events Library
    • Processor of the Year submissions
    • Plastics News Executive Forum
    • Injection Molding & Design Expo
    • Plastics News Caps & Closures
    • Women Breaking the Mold Networking Forum
    • Plastics in Automotive
    • PN Live: Mergers and Acquisitions
    • Polymer Points Live
    • Numbers that Matter Live
    • Plastics in Politics Live
    • Sustainable Plastics Live
    • Plastics Caps & Closures Library
    • Plastics in Healthcare Library
    • Women Breaking the Mold Networking Forum Library
  • Rankings & Data
    • Injection Molders
    • Blow Molders
    • Film Sheet
    • Thermoformers
    • Pipe Profile Tubing
    • Rotomolders
    • Mold/Toolmakers
    • LSR Processors
    • Recyclers
    • Compounders - List
    • Association - List
    • Plastic Lumber - List
    • All
  • Directory
  • Resin Prices
    • Commodity TPs
    • High Temp TPs
    • ETPs
    • Thermosets
    • Recycled Plastics
    • Historic Commodity Thermoplastics
    • Historic High Temp Thermoplastics
    • Historic Engineering Thermoplastics
    • Historic Thermosets
    • Historic Recycled Plastics
  • Custom
    • Sponsored Content
    • LS Mtron Sponsored Content
    • Conair Sponsored Content
    • KraussMaffei Sponsored Content
    • ENGEL Sponsored Content
    • White Papers
    • Classifieds
    • Place an Ad
    • Sign up for Early Classified
MENU
Breadcrumb
  1. Home
  2. News
October 21, 2020 04:26 PM

Millennial offers plastics processors her economic outlook

Catherine Kavanaugh
Staff Writer
Plastics News Staff
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Cara Walton

    Economic recovery is at least a year away and the financial struggles of millennials and the middle class are of particular concern to Cara Walton, a next-generation economist who spoke at MAPP's virtual Benchmarking and Best Practices Conference.

    Walton, 24, pointed to five of the leading economic indicators that companies should watch as they set business strategies amid a recession that started in February, a global pandemic that was declared in March and an election year in a divided America.

    An engagement manager for Harbour Results Inc. in Southfield, Mich., who studied economics at the University of Louisville, Walton said the five key data points — unemployment, consumer spending, consumer debt, government debt and banks — tell a lot about the health of the U.S. economy.

    Walton noted there have only been three times that the U.S. unemployment rate significantly exceeded the 10-year average of 6.5 percent: the Great Depression from 1929-33, when it took 18 months to reach the peak level of unemployment of 11.9 percent; the Great Recession from 2007-09, when it took 22 months to reach 9.4 percent unemployment; and spring 2020.

    "Due to the COVID environment, it took us two months to reach 14.7 percent unemployment," Walton said of the record-high rate in record time. "That's obviously dramatically different than other historical scenarios."

    While the unemployment rate improved to 7.9 percent in September, it is falling at a lower rate than it has historically.

    "From June to July, we saw a 2.2 percent drop in unemployment. It's a pretty dramatic drop in just a one-month span," Walton said. "But when you look from August to September, we only saw a 0.5 percent drop, and that improvement in September was driven more by people leaving the workforce than by more people finding jobs."

    Walton pointed to the big trend of women opting to stay home due to child care responsibilities, which now include home schooling and monitoring online classes.

    Of the 1.1 million people ages 20 and up who left the workforce in August and September, more than 800,000 were women. In addition to parental responsibilities, they have seen jobs dry up in female-dominated professions like hospitality, education and some parts of the health care system. These industries have an unemployment rate of about 22 percent, while the manufacturing sector is in better shape at 6.7 percent, Walton said.

    The duration of unemployment averages 18 weeks, but 2.4 million Americans have been out of work for 27 weeks or longer, she added.

    "That's concerning," Walton said. "When you get past that 27-week point, you're looking at diminishing returns of the ability to get your job back again or find a new one."

    She expects more jobs to be lost in addition to the tens of thousands of positions just put on the chopping block by Walt Disney Co., Allstate Corp., and American and United airlines.

    "Many retail companies are keeping people on board right now because they have high hopes for what's going to happen with holiday spending," Walton said. "But unfortunately if things are going the way they have been for a while, we may not see the rebound we need and more people may get laid off in the first quarter."

    Continuing unemployment will drive a prolonged recession because consumers won't be able to sustainably spend money, Walton said. She noted that many Americans put their stimulus checks toward necessities like food, utilities, household supplies, rent and mortgages. She said overall, disposable income has decreased 1 percent compared with a year ago, if government benefits like stimulus and unemployment checks are removed from the equation.

    To get by, 30 percent of lower-income individuals, who make $25,000 or less, are using credit cards to pay off purchases over time, 42 percent are borrowing from family and friends, and 46 percent are selling things.

    "These people can't sustainably spend money, and unfortunately, the middle class isn't doing much better," Walton said of the group making less than $100,000 a year. "They're doing similar things at similar rates."

    She is especially concerned about the middle class.

    "These people are buying cars and appliances and potentially building a new home and doing the things we need them to do to improve the manufacturing industry," Walton said.

    While millennials have buying power, they also have debt. Born from 1980-96, 72 million millennials have average incomes of $40,532, which is about $10,000 below Gen Xers and baby boomers, Walton said.

    However, millennials carry an average debt load of about $78,000, driven mostly by student loans. Gen Xers and boomers carry debt loads of $96,000 to $135,000, mostly home mortgages.

    "When most millennials got their college degrees, they were seeing dramatic increases to the cost of that degree," Walton said, adding the cost of the average undergraduate degree increased 68 percent in the last 20 years.

    Student loan delinquency rates are now exceeding their 10-year averages, too.

    "Looking at the strapped financial situation of the millennials coupled with the strapped financial situation of the middle class, we're going to see a prolonged recession," Walton said.

    Then there's the federal deficit, which is at a level not seen since the U.S. financed World War II in 1946. And lending institutions are tightening belts. Three banks —CitiGroup, JP Morgan and Wells Fargo — have seen more than a 500 percent increase in bad debt along with declines in their net investments, Walton said.

    "So, they're not sitting in comfortable situations," she said.

    Banks are issuing fewer loans so working capital will tighten and that could hamper some manufacturers needing to buy new equipment, Walton noted.

    Cost structures are going up, too, for taxes, personal protective equipment for employees, cleaning services for facilities and wages. Businesses in places like Cleveland are offering higher pay, signing bonuses and flexible shifts to compete against companies like Amazon for new workers.

    Although the stock market is doing well, Walton said it's a forward-looking indicator that is betting on a vaccine sooner rather than later.

    "What we know right now is that we won't see that vaccine until at least mid next year and then from there we will deal with a series of supply chain and logistical challenges," Walton said.

    No matter who wins the presidential election, she said, her forecast puts economic recovery at least 12 months out. A healthy economy is tied to a healthy population, she added.

    "Ultimately, we will not see economic recovery until we get the virus under control," Walton said. "We need to have people consistently comfortable to leave their homes. We need to have students back in school so parents can go back to work and other things that will allow us to see a booming economy again one day."

    Manufacturers Association for Plastics Processors (MAPP) is based in Indianapolis.

    RECOMMENDED FOR YOU
    Industry sees Biden bioplastics goal as serious signal
    Letter
    to the
    Editor

    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Plastics News would love to hear from you. Email your letter to Editor at [email protected]

    Most Popular
    1
    Biden sets US goal to replace 90% of plastics with biomaterials
    2
    Nova declares force majeure for PE made at Ontario site
    3
    Engineering resin prices close the first quarter with a drop
    4
    Entek picks Terre Haute, Ind., for $1.5B battery separator plant
    5
    Polymer Points Live March 2023: Commodity resin prices rising, but engineering resins see drops
    SIGN UP FOR OUR FREE NEWSLETTERS
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    Get our newsletters

    Staying current is easy with Plastics News delivered straight to your inbox, free of charge.

    Subscribe today

    Subscribe to Plastics News

    Subscribe now
    Connect with Us
    • LinkedIn
    • Facebook
    • Twitter
    • Instagram

    Plastics News covers the business of the global plastics industry. We report news, gather data and deliver timely information that provides our readers with a competitive advantage.

    Contact Us

    1155 Gratiot Avenue
    Detroit MI 48207-2997

    Customer Service:
    877-320-1723

    Resources
    • About
    • Staff
    • Editorial Calendar
    • Media Kit
    • Data Store
    • Digital Edition
    • Custom Content
    • People
    • Contact
    • Careers
    • Sitemap
    Related Crain Publications
    • Sustainable Plastics
    • Rubber News
    • Tire Business
    • Urethanes Technology
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • News
      • Processor News
        • Injection Molding
        • Blow Molding
        • Film & Sheet
        • Pipe/Profile/Tubing
        • Rotomolding
        • Thermoforming
        • Recycling
      • Suppliers
        • Machinery
        • Materials
        • Molds/Tooling
        • Product news
        • Design
      • More News
        • K Show
        • Mergers & Acquisitions
        • Sustainability
        • Public Policy
        • Material Insights Videos
        • Numbers that Matter
      • Digital Edition
      • End Markets
        • Automotive
        • Packaging
        • Medical
        • Consumer Products
        • Construction
      • Special Reports
        • Processor of the Year
        • Best Places to Work
        • Women Breaking the Mold
        • Rising Stars
        • Diversity
        • Most Interesting Social Media Accounts in Plastics
      • Newsletters
      • Resin pricing news
      • Videos
    • Opinion
      • The Plastics Blog
      • Kickstart
      • One Good Resin
      • Pellets and Politics
      • All Things Data
      • Viewpoint
      • From Pillar to Post
      • Perspective
      • Mailbag
      • Fake Plastic Trees
    • Shop Floor
      • Blending
      • Compounding
      • Drying
      • Injection Molding
      • Purging
      • Robotics
      • Size Reduction
      • Structural Foam
      • Tooling
      • Training
    • Events
      • K Show Livestream
      • Plastics News Events
        • Plastics News Executive Forum
        • Injection Molding & Design Expo
        • Plastics News Caps & Closures
        • Women Breaking the Mold Networking Forum
        • Plastics in Automotive
      • Industry Events
      • Injection Molding & Design Expo
      • Livestreams/Webinars
        • PN Live: Mergers and Acquisitions
      • Editorial Livestreams
        • Polymer Points Live
        • Numbers that Matter Live
        • Plastics in Politics Live
        • Sustainable Plastics Live
      • Ask the Expert
      • Plastics News Events Library
        • Plastics Caps & Closures Library
        • Plastics in Healthcare Library
        • Women Breaking the Mold Networking Forum Library
      • Processor of the Year submissions
    • Rankings & Data
      • Injection Molders
      • Blow Molders
      • Film Sheet
      • Thermoformers
      • Pipe Profile Tubing
      • Rotomolders
      • Mold/Toolmakers
      • LSR Processors
      • Recyclers
      • Compounders - List
      • Association - List
      • Plastic Lumber - List
      • All
    • Directory
    • Resin Prices
      • Commodity TPs
        • Historic Commodity Thermoplastics
      • High Temp TPs
        • Historic High Temp Thermoplastics
      • ETPs
        • Historic Engineering Thermoplastics
      • Thermosets
        • Historic Thermosets
      • Recycled Plastics
        • Historic Recycled Plastics
    • Custom
      • Sponsored Content
      • LS Mtron Sponsored Content
      • Conair Sponsored Content
      • KraussMaffei Sponsored Content
      • ENGEL Sponsored Content
      • White Papers
      • Classifieds
        • Place an Ad
        • Sign up for Early Classified