2016 Outlook: Challenges Ahead for U.S. Manufacturing, Material Handling and Growth

MHI-Q0116_L_Final-67The outlook for U.S. economic growth in 2016 and 2017 softened in the second half of 2015, as forward-looking manufacturing and material handling data reflected a significant slowdown in activity. While U.S. manufacturing has weakened, the U.S. service sector has remained solid, which bodes well for growth through at least the middle of 2016.

At the same time that the outlook for the U.S. economy has softened in recent months, the outlook for the global economy has remained modestly positive in light of accommodative monetary policy stimulus being implemented in the Eurozone and China.

In 2016, we expect improving Eurozone growth as well as some modest improvements in Chinese manufacturing activity. As the global economy improves, we also expect modestly rising commodity prices accompanied by continued foreign exchange rate volatility – especially as the U.S. economy slows and lurches toward a recession later this year or next year.

In October 2015, Prestige Economics conducted its quarterly survey of planned business activity, and approximately two dozen of clients respondents reported expectations of a U.S. recession by 2018 (see bar graph). We have provided this data as an outside perspective, since none of these respondents are active in the material handling industry. Although we do not expect the next U.S. recession will be another Great Recession, another recession is coming.

By Jason Schenker , CFP®, ERP®, CVA®, Prestige Economics, LLC

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