“It is the time to dare and endure.” Winston Churchill made that statement in 1940, and it is apropos today, as hopefully, many of us are coming to the end of the “stay at home” quarantine and will soon be free to roam again. It has also been said that it is during particularly difficult times where possibilities are mined and take flight. We will need those encouraging words in the days, months, and perhaps years ahead as evidenced in the latest Industrial Heating Equipment Association’s (IHEA) Executive Economic Summary. The report states, “This may well be the most distressing assessment of the U.S. (and global economy) since the recession of 2008. None of the bad news that follows will come as any surprise to anyone as we are all quite aware of the damage that has been caused by the reaction to the COVID 19 pandemic.”
The report explains the difference between the 2008-09 recession and that of 2020 – the current recession is an artificial one created by the forced shutdown of the economy. The U.S. enjoyed a robust economy and healthy job numbers at the beginning of the year. “The potential silver lining to all of this is that government … can reverse the process. The day that lockdowns are declared at an end, there will be recovery. Consumers will consume again, employers will hire again, producers will produce again. How much and how fast will be the prime questions.”
In the meantime, however, “Of the twelve indicators followed in this index, there are only four that are still trending in a positive direction and they will not be holding that distinction for long.” The durable goods numbers and factory orders numbers rose a little, but this only indicates there has been a delay in terms of industry response. The activity in the durable goods category is a lagging indicator. There has not yet been enough time for the reduction in activity to manifest in the numbers, i.e., airlines, heavy construction equipment, oil field machinery, farm equipment which have all taken major hits in decline.
The summary continues, “The improvement in the transportation numbers may be a bit more realistic. There has been high demand in the parcel sector as everybody has been ordering things delivered.” The other sectors in transportation have not fared as well like ocean cargo, air freight, and the rail sector.
The only other area that experienced a gain was in capacity utilization, “but that will shift as there is now considerably more slack in the system than was the case earlier.” Normally these numbers would reflect the pushes and pulls of supply and demand, but that process has been interrupted … and now almost every business has an overcapacity concern.
We are all living in a “waiting” mode anticipating the “all clear” proclamation. Then, as the summary report concludes, “Once some measure of control is achieved, the economy will be restarted, and then the focus will be on the speed of recovery.”
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.
