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ECONOMIC MARKET ANALYSIS: Growth Continues, Despite a Risky First Half of 2018

* By Jason Schenker *

The first half of the 2018 included a number of policy surprises that engendered significant financial market volatility. U.S. trade policy, in particular, became a flashpoint of uncertainty, as tariffs were lobbed back and forth between the U.S. and China. The aftermath of that uncertainty is likely to cast a shadow over growth prospects late this year and in 2019.

These risks had the unintended consequence of forcing business leaders and market mavens to incorporate downside risks to growth (and upside risks to commodity prices) from tariffs and trade for the first time in decades.

Fortunately, the near-term outlook for the U.S. economy, global economy, and material handling remained generally positive. Leading economic activity data, low interest rates, favorable tax policies in the U.S., a falling greenback, and solid equity markets were all positive dynamics in place at the start of 2018. A mix of these factors have continued to provide reasons to be somewhat optimistic about growth for the year overall, although interest rates, equity markets, and leading economic data have experienced surprising swings. Those swings, and scars from uncertainty of fiscal, monetary, and trade policies, could dampen the outlook.

Simply put, for the second half of the year, there are rising risks—with even bigger risks to growth to material handling and supply chain industries in 2019.

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According to the recently released 2018 MHI Annual Industry Report, “Overcoming Barriers to NextGen Supply Chain Adoption,” eight out of ten survey respondents believe these supply chains will be the predominant model within just five years. However, the report found that the adoption of some of these technologies was slower than originally reported when MHI started the annual report in 2014. The report cites three top barriers to adoption of these technologies: 1. Making the business case for NextGen supply chain investments. 2. Tackling the supply chain skills gap and workforce shortage. 3. Building trust and security in digital, always-on supply chains. This issue of MHI Solutions focuses on the adoption of these digital solutions, from best practices in robotics and artificial intelligence to blockchain and innovations in last mile delivery.

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