The changes and current events occurring in our cities, states, country, and around the world are causing our heads to spin and our equilibriums to stagger. While information from the latest Industrial Heating Equipment Association’s (IHEA) Executive Economic Summary will come as no surprise for many, an unexpected, yet welcome projection will be sure to bring hope and encouragement to our weary spirits.
The report begins by explaining the incredible speed, fluidity, and “real time” fluctuations of information. “The data stream that informs the assessments we review each month has been affected right along with everything else in the economy. The changes have been taking place at a bewildering pace, outdated almost as soon as the data is collected.” Hence, because these numbers are so organic, “This set of numbers and graphs are only as accurate as they were a week or so [ago], and by now, they have all changed in significant ways.”
Despite the data pointing downward, almost universally, there are two of the twelve sectors assessed that have shown growth — steel consumption and capital investment. The summary states, “Steel consumption should be down given all the problems outlined in manufacturing and construction. There has been very little traditional demand for steel and that would lead one to expect deteriorating consumption. The slight uptick suggests that some users of steel are preparing for a return to higher prices down the road when there is an economic recovery and thus, they are trying to buy now while prices are low.”
The motivation behind the gain in the capital investment index has been similar to that of steel consumption. “Now is the time to invest in new equipment or even expanded facilities as the prices are very low and there is some willingness to deal. This is a pattern that is nearly always seen during recessions . . .”
As to the rest of the numbers, the report says, “The first and most important is that this is an artificial recession imposed by a lockdown strategy intended to address another issue. In the simplest of terms, the economic crisis is collateral damage in the war on the COVID 19 outbreak.”
But, as we conclude, there is optimism as we get a glimpse of, in the words of Paul Harvey, “the rest of the story.”
“There is a surprisingly level of confidence as far as the future is concerned. The analysts that have been looking at the expected progress of the economy, as well as the virus, still contend that we are in the midst of a “V” recession – one that falls very quickly but rebounds just as fast. The assertion is that there is enough pent up demand to drive consumer behavior, and this will encourage business to respond quickly, and that will mean they will bring the majority of their workforce back from their “furlough,” and that will encourage even more consumer activity. . . It all becomes a matter of timing and the resilience of the consumer.”
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.
