The latest Industrial Heating Equipment Association’s (IHEA) Executive Economic Summary begins, “The lockdown recession has been with us for over three months now, and there are few that have not experienced the impact.” How true are those words. But, be encouraged, “By most accounts this will be the bottom, and future reports will start to show slow improvement . . . there have been consistent assertions that economic growth will rebound by the third and fourth quarter.” Some may doubt the optimism, however, “there are some indications that such a forecast may be realistic.”
The indices share a consistent theme in that all show a decline “that are nearly a straight line down.” Yet, there is one notable exception: the data for the Credit Managers’ Index reveals the same severe decline, but with an upward trend at the end. The summary explains, “The index is divided into favorable and unfavorable categories from the perspective of a credit manager. The favorables include categories such as ‘sales,’ ‘applications for credit,’ ‘dollar collections’ and ‘amount of credit extended’. The unfavorables include ‘rejections of credit applications,’ ‘accounts out for collection,’ ‘disputes,’ ‘slow pays’ and ‘bankruptcies’.”
The decline that was evident in March and April was due “almost entirely to the collapse in the favorable data.” But in May, they improved substantially. Interestingly and optimistically, “Credit managers tend to think in the future as they are most concerned with what shape a debtor will be in when they are due to pay. If a company has 90 or 120 or 180 days to pay the credit manager is not going to worry about them until that time. The fact that they are getting a bit more confident now indicates that they are starting to see some positive developments down the road and not all that far away.”
The other indices share a woeful tale with record setting declines. The report explains, “There is no mystery at all as to why this is the case as the lockdown was universal and sudden. There was no time at all for business or the consumer to prepare, and there have been very few options available since the declaration.” However, the U.S. Labor Department released the latest job numbers and there were expectations that the unemployment number would hit 20%, but in reality the number was 13.4%.
So, where does the economy go from here? The summary cites three factors that will come into play: First, the attitude of the consumer — “If there is to be a real rebound the consumer will have to want to resume their old behaviors and soon.” Second, the action of the government — “[This] has varied from state to state. Some have been eager to reopen and others have put off this resumption until into 2021.” Third, the course of the viral infection — this will drive the first two factors.
Buckle up, folks, the wild adventure continues!
The report is available to IHEA member companies. For membership information, and a full copy of the 12-page report, contact Anne Goyer, Executive Director of the Industrial Heating Equipment Association (IHEA). Email Anne by clicking here.
