March 17, 2025

Taylor St. Germain:
Hi, everyone. My name is Taylor St. Germain with ITR Economics, and welcome to this edition of TrendsTalk. We at ITR are your apolitical and unbiased source of economic intelligence, and today I wanted to discuss some good news.

I feel like we could all use some good news, given the economic and political environment, just all the uncertainty. Hopefully, I can bring some uncertainty and good news here today. The news I have to share with you all is that the US industrial economy, the US Industrial Production Index, has transitioned to a new phase of the cycle. We’re actually right approaching phase B, accelerating growth, and that is a welcoming sign after what we have been through in the industrial side of the economy. Really, over the course of the last 12 months.

As many of you know, the US Industrial Production Index is one of ITR’s primary series of focus, as many of the clients that we work with are manufacturers, distributors, oil and gas, utility companies, a whole host that fall under this industrial umbrella. And so Industrial Production is an important dataset and an important forecast for us to get correct, and we are tracking along with our expectations, which is great news.

Just to give you some data points, the US Industrial Production Index year over year is at 0.0%. We are flat compared to the same time 12 months ago, but that’s a nice change from the mild negative numbers that we experienced throughout the majority of 2024, and to sweeten the deal even more. Or if you look at the 3/12 growth rate for US industrial production, it has now improved to a positive 0.4%.

So what does this mean? It means the recovery’s on, growth is coming our way in 2025 and 2026, just like we’ve forecasted and that’s really encouraging news. Again, 2024 was characterized by a lot of higher inventory levels having to work through those inventories, seeing some erosion of some of the end market demand for the manufacturing space. And a lot of folks that were correlated with the Industrial Production Index had some down years when looking at their revenue or profits year over year. So it’s really encouraging to say that, hey, we’ve passed that low point now and we see this growth out there on the horizon.

Now this growth is going to come with challenges and I discussed that on the last TrendsTalk episode so if you wanted to hear more about those growth challenges please refer to the the previous episode. But when we look at 25, 26 we see this accelerating growth through the remainder of this year and as we move into 2026 we do expect that next peak to form but we still expect 2026 to finish positive. So we’re looking at a 1.4% growth rate in 2025 for the US industrial economy and a 1.5% growth rate in 2026.

I know as businesses many of you might not share the level of optimism that I have here today about where the economy is and where we’re going. However I really encourage you to take a step back and look at the leading indicators and look at ITR’s forecast. It’s very normal as we pass through inflection points pass through low points like we just have to still feel some of the negativity of the last year rather than the positivity that the leading indicators are suggesting moving forward.

But that’s why our methodology at ITR is important. We always want you to be thinking a half a cycle ahead and if you take the time now to prepare for the growth that we really expect to characterize the second half of 25 and 26 you’re going to find yourself at a major advantage compared to the companies that are still pretty pessimistic at this point and aren’t taking those steps to really put their foot in the gas.

There’s a lot of encouragement in the leading indicators despite all the political on-going and uncertainties and we really let the data do the talking. So take the time now while things are still a little bit slower to prepare your business for the rise in the growth that we expect to characterize at least the next two years to come. It’s worth celebrating, especially when we pass through these low points after the challenging year 2024 was.

Certainly hope you found this information helpful. I’m Taylor St. Germain with ITR Economics. Please remember to like and subscribe to TrendsTalk wherever you listen to your podcast. And I look forward to seeing you all in the next one. Take care for now. Thank you.