From this week's issue of Chemical and Engineering News (article by Alex Tullo):
Economists expect the US economy to make a dreary showing in 2024, though it should manage to avoid a recession. That outlook sets a low bar for the chemical industry, and—with a challenging 2023 over—analysts predict that the sector should clear it.
The Federal Reserve and its counterparts in other countries have been raising interest rates to rein in inflation. But those moves have slowed key sectors of the economy, including new housing.
In its 2024 economic forecast, Morgan Stanley writes, “With inflation cooling, central banks around the world face a Goldilocks dilemma: If they are too easy with monetary policy, inflation could come roaring back; but if they keep policy too tight, it could trigger a recession.”
The investment bank is optimistic that policymakers will succeed. It expects US economic growth to remain positive in 2024, at 1.9%, compared with 2.4% last year. Economists’ consensus forecast is 1.0% growth for the year, Morgan Stanley says.
Goldman Sachs is also bullish. “The heaviest blows from monetary and fiscal tightening are well behind us,” the bank says in its outlook report. It puts the chance of recession at only 15%, well below economists’ consensus of 48%.
Predictions from economists at the American Chemistry Council (ACC) are more in line with the consensus. The ACC forecasts that growth will slip to 1.1% in 2024. The trade group expects housing starts—home construction is a key consumer of chemicals—to slide from an already-sluggish 1.39 million in 2023 to 1.35 million this year. It expects light-vehicle sales to be flat, at about 15.5 million units.
But against that backdrop, the ACC thinks the US chemical industry will perform better this year than it did in 2023. It forecasts a 1.5% increase in chemical output, excluding pharmaceuticals, versus the 1.0% drop in output last year.
Well, this sounds like good news to me. Here's hoping it is true.
