A number of trends have developed in recent weeks that could potentially affect the U.S. economy in a negative way. The most widely reported include a sharp decline in the stock market, the yield curve inverted for some maturities and the intensified uncertainty that hangs over America's foreign-trade activities.
These trends are emerging against a backdrop of an economic expansion that is the longest, but also one of the least robust, that we have ever experienced. So it is not surprising that I find myself engaged in a crescendo of discussions pertaining to whether an economic recession is imminent.
Before I offer my own opinion, I will report that the results of the June survey of the National Association of Business Economists indicate only 15 percent of its members expect a recession to start in 2019, but that number climbs to 60 percent who expect a recession by the end of 2020.
According to their latest report, "Increased trade protectionism is considered the primary downside risk to growth by a majority of respondents, followed by financial market strains and a global growth slowdown."
As for how this will affect the North American plastics industry, I start with the premise that a disruption to global trade activity will have the greatest impact on the materials and machinery sectors. The recent news of tariffs on Mexican imports could potentially affect a significant number of processors as well, but it is still too early to assess the impact or probability of this particular risk. Overall, the net effect on all sectors of the plastics industry will be negative if the U.S. economy enters a recession.
While President Donald Trump said June 7 that his administration would not impose tarifffs on Mexican-made goods immediately, on June 10 he also warned that tariffs could still come into play if officials in Mexico do not sign up to unspecified elements of an agreement related to the flow of migrants from Central America.