The U.S. economy is improving after the destruction caused by the COVID-19 pandemic. This cautiously positive outlook is based on experts' reviews of the key economic indicators, including gross domestic product (GDP), unemployment, and inflation. Analysts also have taken a hard look at interest rates, oil and gas prices, jobs, and the impact of climate change.
IHS Markit Chief U.S. Economist and Co-Head U.S. Economics Joel Prakken commented in a research note that this forecast is based on myriad factors.
“The acceleration in the COVID-19 vaccine rollout, strong data on consumer spending and the relaxation of COVID-19 containment measures by many states led to an upward revision of our forecast of GDP growth for 2021 from 5.7% to 6.2%, and for 2022 from 4.1% to 4.3%,” wrote Prakken. “We expect this growth to push GDP past its previous peak by the middle of this year and eliminate the output gap in 2022. The previous peak of employment will be regained in late 2022, and the unemployment rate is expected to decline to 3.5% by mid-2023.”
That is encouraging, and it supports the ongoing evidence pointing to an improving economic, and, by extension, logistics outlook, too. But, we’re are not there yet, even though there are reasons to believe things are heading in the right direction.
Recent data from the Institute for Supply Management (ISM), relating to the manufacturing and services economies, for the month of March bear that out, too. You can click on the links for each respective story and data set, but, on a top level, many of the causes for concern cited by the ISM are very much in line with those cited by IHS Markit’s Prakken, in the form of the pace of the vaccine rollout, strong consumer spending, and other things too, like the re-opening of businesses in certain regions and industries.
Manufacturing Heating Up
Before the pandemic hit, the manufacturing industry was working to regain the momentum it had reached after the 2008 recession. However, after the first wave of pandemic-driven shutdowns, segment recoveries for various manufacturers have been uneven. Looking ahead to 2021, the recovery may take longer to reach pre-pandemic levels.
Reeling from the effects of a global pandemic-driven shutdown, US industrial production (-16.5% year over year) and US total factory orders (-22.7% year over year) saw a steep decline in April, followed by suppressed improvement. The current US Industrial Production Index stands at 105.7 in December (the most recent month available), a substantial dip from its pre-pandemic level of 110. Production and order levels are still below 2019 levels, but the trajectory of the decline has slowed.
The year ahead will vary for manufacturers depending on where they have felt the greatest impact from the pandemic. For some, it will focus on rebuilding lost revenue streams; for others it could require recalibrating supply networks to serve different market demands. But for all manufacturers, it should include a commitment to increasing agility in operations. By continuing to invest in digital initiatives across their production process and supply network, manufacturers can respond to the disruptions caused by the pandemic and build resilience that can enable them to thrive.
Logistics Industry Has Been The Backbone Of The Recovery
The Logistics Industry generally follows the domestic manufacturing levels. If you manufacture goods, you generally need to ship them. The Logistics companies who managed to survive the pandemic are busy as they have ever been. Those who did not survive, along with the ongoing driver shortage, have created an equipment shortage across the industry.
Logistics planning will be critical moving forward to ensure you have equipment available to ship your finished goods. Look to Land Link Traffic Systems to help you plan your supply chain in this demand driven market. Visit us @ www. Land-Link.com.
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Stay Safe Everyone.
To stay up to date on these and other Logistics topics subscribe to our blog @ http://www.Land-Link.com/blog.
Author
Michael Gaughan
Technology Officer
Land Link Traffic Systems
Land-Link, a well respected professional organization, has been providing its clients with effective transportation and logistics solutions since 1978.
