Chemical Industry Economist Predicts Short, Shallow Recession Followed By Rebound
The chemical industry will continue down a bumpy road through 2024, according to Martha Moore, chief economist and managing director for economics and statistics at the American Chemistry Council (ACC). On July 11, Moore updated the Chemical Processing audience on the state of the chemical industry via a webinar.
Her forecast noted near-term recession, which will be short in duration and relatively shallow in terms of the decline between the peak and the trough. Moore predicted much of this in the January article she wrote for Chemical Processing: “2023 Chemicals Industry Outlook: Brace For Challenges.”
Despite the challenges, there are glimmers of hope. Moore notes the benefit of the chemical industry being at the early part of the supply chain. “We're likely to see the recovery in chemicals happening before we see the larger recovery elsewhere in manufacturing, consumer spending and business investment. We'll start turning out of this downturn toward the end of the year,” she predicted.
Moore and her colleagues at the ACC look at 18 end-use industries that are major consumers of chemicals and chemical products. “Of those 18, we only expect four to expand in the United States this year, including oil and gas extraction, aircraft, motor vehicles and apparel, which is interesting as I have not been able to track down exactly what is going on in the apparel market.”
In 2024 Moore expects to see some areas tied to the housing industry start to rebound. She noted semiconductors, structural panels and appliances.
The Inflation Reduction Act, which has clean energy provisions, is spurring new projects, as are the Infrastructure Investment and Jobs Act and the CHIPS Act, which is driving investment in the U.S.
“U.S. manufacturers realized that long-distance supply chains that relied on China were not the best strategy,” Moore said. “There has been an organic movement to reshoring or nearshoring of manufacturing supply chains, which will be supportive of U.S. chemistry going forward.”
