The American Chemistry Council (ACC) said in its latest outlook report that it expects U.S. economic growth to slow in the coming year. The report said: “The momentum driving U.S. economic growth in 2023 is beginning to fade. Although U.S. GDP growth was strong in the third quarter, U.S. economic growth is slowing. After a year and a half of raising interest rates, inflation and the labor market are cooling.”
The report said that although consumer spending showed surprising resilience in 2023, pressure from high prices and borrowing costs began to have an impact, and the reduction in savings during the epidemic also began to exacerbate consumer spending. “Following consumer spending growth of 2.2% in 2023, we expect growth to slow to 1.0% in 2024,” the ACC said.
On the business side, investment grew by 4.1% in 2023, but growth is expected to slow to 0.6% in 2024 given rising borrowing costs, tighter lending standards and lower consumer spending.
Elsewhere in the world, higher interest rates are slowing economic growth, although conditions are improving in parts of Asia. However, world demand remains weak as inventories accumulated in response to supply chain disruptions dwindle.
In 2023, industrial production overall will grow by only 0.3%, and growth is expected to be flat by 2023. However, the automotive and aerospace sectors, which are important applications of polyurethane, performed better.
ACC said that as the end of 2023 approaches, the inventory destocking cycle has basically been resolved, but signs of customers restocking have not yet appeared. “We expect chemical production to decline by 1.0% in 2023 compared with 2022, with production declining in all chemical segments except consumer goods.”
“In 2024, we expect a modest recovery across all segments, with overall chemicals production growing by 1.5%. This is consistent with findings from ACC’s Economic Sentiment Index, which found that chemicals companies believe overall business activity in the third quarter and “Demand from major customers is down, but supply chains are expected to improve over the next six months, and we expect a turnaround in the chemicals industry before the overall economy improves.”
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