96 THE DISTRIBUTOR’S LINK GLOBALFASTENERNEWS.COM by JOHN WOLZ EDITOR editor@globalfastenernews.com ECONOMIST TELLS NFDA: “DON’T SEE RECESSION” “We at ITR Economics don’t see a recession coming,” economist Lauren Saidel-Baker told the National Fastener Distributors Association. There may be a “soft landing” from today’s strong economy, but not a recession, she said. “We can’t sustain a 7.4% growth rate,” Saidel-Baker said. “There is a lot of good news,” such as a resurgence in B2B spending, Saidel-Baker declared. “I like the data,” she observed. “We aren’t changing spending habits” even with higher gasoline prices, Saidel-Baker said. Even after filling up at higher gas prices, with a child in the back seat “you are still headed to the toy store.” Two thirds of GDP is consumer spending and “retail sales only go down in a recession,” she commented. The “pace of growth will decline,” Saidel-Baker acknowledged. The U.S. can’t maintain 15% growth and the current 7.5% growth, she said. Higher real estate prices encourage housing starts and multi-unit housing starts at 24.5% is at record high, she pointed out. Those multi-unit projects take longer to complete than single-family construction, Saidel- Baker pointed out. Still rising rents encourage more development. Another bright spot in real estate development: Private warehouse construction as suppliers need distribution centers. New orders may be showing some decline, but only bringing them down to “more sustainable” rates, Saidel-Baker said. ¤ Supply chain problems have been “incredibly difficult, putting a lot of pressure” on the economy. But numbers show supply chain issues “ticking down in past couple months” and should be “normalizing.” ¤ Commodity prices are still going up, but where numbers are doubling, they were tripling, she pointed out. ¤ Steel prices are “stabilizing, flattening out.” ¤ Heavy duty truck production is up, partly because with a shortage of chips automotive manufacturers want to put them in trucks where profit margins are highest. “We need trucks,” she declared. ¤ U.S. machinery orders are up due to reshoring or near shoring (Canada and Mexico). But the 16.8% growth rate is “not for long.” ¤ New orders for computers and electronics are “leading the charge for on-shoring.” Contributing to the U.S. growth in computers is the talent in the U.S. “We have the best and brightest,” Saidel-Baker observed. ¤ Inflation rates are at a 40-year high, creating consumer “whiplash” but that is after a decade of low inflation. The economy can absorb inflation for a while and we can expect a “couple more quarters” of price increases, followed by dis-inflation, Saidel-Baker told the NFDA. “We’ve been there before. We’ve gotten through so much worse.” BUSINESS FOCUS ARTICLE CONTINUED ON PAGE 172
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