Houston — The U.S. plastics market appears to be slowing, and there are numerous warning signs for the global economy as well, according to a pair of industry economists.
"Our last outlook was upbeat … but our next one isn't going to be as strong as last year," Perc Pineda said June 5 at Global Plastics Summit 2019 in Houston. Pineda is chief economist for the Washington-based Plastics Industry Association.
The U.S. economy has slowed and some global markets are weak, Pineda added. These challenges are happening in spite of engaged consumers, a strong labor market, low unemployment and stable prices, he said.
The U.S. housing market continues to grow, but "isn't as upbeat as we want it to be," according to Pineda. U.S. plastics firms also still are struggling to find skilled workers. "The current labor shortage is unsustainable," he said.
Pineda also said that he was concerned about the possibility of the U.S. placing tariffs on Mexican products, which could damage businesses in both countries.
"Mexico and Canada are our biggest export markets," he said. "It doesn't make sense to me to give Mexico a hard time."
In spite of the slowdown, U.S. makers of resin, finished products and molds are on track to show gains in 2019, although machinery makers will see lower results vs. 2018. Pineda encouraged plastics firms to "listen to your clients and their markets" during these weaker global economic conditions.
Also at GPS 2019, Nariman Behravesh said that the global economy "is back in the danger zone" because of tariff fights that the U.S. is engaging in with several countries.
The proposed U.S. tariffs could push Mexico into a recession and the combined tariffs could reduce global GDP growth by as much as 0.7 percent in 2019 and 2020, said Behravesh, chief economist with IHS Markit. IHS co-hosted the event along with the Plastics Industry Association.
"This [U.S.] administration seems intent on raising tariffs on just about everyone," Behravesh said.
He added that rather than placing tariffs on China alone, the U.S. should have worked with its allies to place economic pressure on China, which Behravesh said "has been an unfair trader."
"Going head to head isn't the way to deal with China," he added. "But the U.S. has declared trade wars on its allies."
Behravesh said that 80 percent of the cost of tariffs ultimately is paid by U.S. consumers. The current round of U.S. tariffs "is a massive self-inflicted wound," he added. "We're doing this to ourselves."
