Washington DC, US – In its latest outlook post, the American Chemistry Council (ACC) has said that an economic slowdown expected in the US in the coming year. “The momentum that has propelled the US economy during 2023 is starting to fade,” it said. “Despite robust growth in U.S. GDP during Q3, the US economy is slowing down. Following a year and a half of interest rate increases, inflation and the labour market are cooling.”
While consumer spending has been surprisingly resilient in 2023, it said, the strain of high prices and borrowing costs are starting to bite, as is the erosion of savings made during the pandemic that have fuelled consumer spending recently. “Following a 2.2% gain in consumer spending in 2023, we expect growth to slow to 1.0% in 2024,” ACC said.
On the business side, investment rose by 4.1% in 2023, but this rate is projected to slow to 0.6% in 2024 in the light of higher borrowing costs, tighter lending standards and a fall in consumer spending.
Elsewhere in the world, higher interest rates are slowing growth, although in parts of Asia the situation is better after China’s anti-Covid policies were relaxed. Yet world demand remains weak, as inventories built up in response to supply chain disruptions are reduced.
Industrial production overall was up by just 0.3% in 2023, and growth is expected to be flat through 2023. However, automotive and aerospace, both of which are significant users of polyurethane, performed better.
As the end of 2023 nears, it said, the inventory destocking cycle has largely been resolved, but signs of customer restocking have yet to materialise. “Compared to 2022, we expect chemical output volumes to fall 1.0% in 2023 with lower output in all chemistry segments except consumer products,” it said.
“In 2024, we expect a modest recovery in all segments with overall chemistry output growing by 1.5%. This is consistent with the findings of ACC’s Economic Sentiment Index that found chemical firms felt that overall business activity and major customer demand deteriorated in Q3 but were expected to improve over the next six months. Because of the chemical industry’s early position in the supply chain, we would expect to see a turnaround in chemicals before improvement in the broader economy.”
The full data set, with historic trends and forecasts through 2026, is available to ACC members on ACCexchange, and to others on the ACC Store.