MHI Solutions

Economic Market Update

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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This issue of MHI Solutions tackles the important topic of digital technologies in the supply chain industry, especially as it relates the transportation and logistics. Transportation plays a central role in supply chains, whether they are local or global enterprises. And just like the overall supply chain, transportation is facing a digital revolution including new solutions for tracking road, rail, sea and air freight and parcel transportation. These digital technologies are disrupting the industry, but they are also providing im-portant new solutions for transportation inefficiencies and urban logistics challenges. They are also creating new digital business models that enhance transparency and sustainability and contribute to end-to-end supply chain visibility. Like the innovations impacting supply chains, these trends are being driven by the growth of e-commerce and the consumers’ never-ending need for better, faster and cheaper. Ignoring them is done at your own peril.

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