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October 21, 2024
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- October 21, 2024
with Taylor St. Germain
PREPARE NOW FOR ECONOMIC GROWTH IN 2025
This week on TrendsTalk, ITR Economist Taylor St. Germain returns to the show and highlights recovery for both US Industrial Production and US Manufacturing. Looking ahead, he reviews the sectors we expect to see economic growth in next year. What should you be doing now to capitalize on the opportunities coming in 2025? Tune in to find out!
MEET YOUR HOST
Taylor St. Germain
As an experienced economist, Taylor St. Germain provides consulting services for small businesses, trade associations, and Fortune 500 companies across a spectrum of industries. His dynamic personality and extensive knowledge of economic trends and their business relevance are highly valued by clients and colleagues alike.
“Join me on the TrendsTalk podcast to explore the world of economics. Episodes offer insightful discussion and expert interviews. We cover relevant economic concepts in an accessible way. Whether you are a curious layperson or an industry professional, TrendsTalk is your go-to source for thought-provoking analysis and a deeper understanding of the economic forces shaping our world.”
Key Episode Takeaways
- 0:09 – Taylor St. Germain returns to TrendsTalk
- 1:23 – Discussing recovery of US Industrial Production and Manufacturing
- 4:11 – Preparing for economic growth in 2025
- 5:33 – Insight into the expected growth rates for various manufacturing sectors
- 7:27 – Don’t fall behind, act now to prepare for economic growth ahead
The below transcript is a literal translation of the podcast audio that has been machine generated by Notta.
Taylor St. Germain:
Hi everyone, my name is Taylor St. Germain with ITR Economics and welcome to this episode of TrendsTalk. We at ITR are your apolitical and unbiased source of economic intelligence. And I’d first off really like to thank my colleague Mike for filling in for me while I was out on paternity leave, and I wanted to thank everyone who reached out to me on LinkedIn to congratulate me on my son, my wife and son are both doing very well. His one month birthday is quickly approaching and life is good so thank you again to everyone who reached out on LinkedIn I really appreciate that.
But back into the economics and we’ve got a lot to talk about here today. I wanted to start off with a comment around US industrial production and what that means for manufacturing production as well as the different verticals and how these verticals are expected to perform as we look at 2024 and 2025. There’s been a lot of requests coming our way for where is manufacturing in this cycle? Where’s the bottom? Are we seeing signs of improvement and what does 2025 look like?
So I wanted to first start off with industrial production as many of you know as listeners of TrendsTalk know that is one of our headline macroeconomic series that we forecast on a regular basis and when we look at industrial production and really pull industrial production apart to look at the various components manufacturing is the largest component. Manufacturing makes up about 75% of industrial production. So wherever industrial production is going manufacturing is all is typically in a similar position in the economic cycle. But I’ll highlight some nuances.
So the very first thing I’d like to point out, and this is exciting news for an economist and I think for business owners and employees really around the country, the good news is that both industrial production and that manufacturing component have entered the recovery phase of the cycle.
So what do we mean when we say that? Well, when we say recovery, that means the growth rates, specifically year-over-year growth rates for industrial production and manufacturing, have reached a low point and have actually improved. So we’re still in the negative territory for both metrics, but those growth rates are getting less negative, working their way back up towards zero and back towards that positive growth. That’s why we call it the recovery phase of the cycle, because we’ve hit a low point and those growth rates are improving.
And that is the case for both industrial production and manufacturing. Industrial production is still down below the year ago level by about 0.2%, so we’re at a minus 0.2%. Manufacturing production is at a minus 0.5%. So that manufacturing component is slightly lower than the overall industrial production index, likely because industrial production is getting a little bit of a boost from oil and gas and utilities. But again, both recovering, bouncing off low points, and as we look ahead to 2025, we see accelerating growth characterizing both the overall industrial economy and manufacturing production.
So what does that mean for all of you listening to this podcast and listening to what I have to say about the data? It means it’s time to prepare for growth. The recovery phase is really our runway to prepare, to invest, to bring on additional talent and capacity to ensure that we’re ready to take on the accelerating growth that’s coming our way in the future.
And that is what is key right now. I know there’s a lot of concerns around the election. Our chief economist Brian Beaulieu wrote in the Executive Summary all about this rising trend in 2025 and about the lack of impact from the election results. Regardless which way the election goes, we see 2025 as an accelerating growth year for the industrial economy and manufacturing. And that’s why I say don’t hesitate. We’re in the recovery phase of the cycle now. Now it’s time to step on the gas and ensure you’re prepared for this accelerating growth that’s coming our way in 2025.
Now, of course, I’m talking about big macroeconomic data sets. The natural question is ‘Well, Taylor, within manufacturing, what components are going to perform better than others in 2025?’ Again, you can head over to our Trends Report in the Manufacturing module, and we give a breakdown of a lot of these various manufacturing sectors. And the short answer is that most every manufacturing component, subcomponent, is expected to grow in 2025 when comparing to 2024.
Now, again, there’s difference in growth rates. For example, we have North America light vehicle production, or the automotive market, growing about 1% in 2025, when we have the aircraft market growing about 5.7% in 2025. So, while most of these components are growing, there are… Different industries and different sectors that are going to see higher levels of growth than others. Again oil and gas growing at about 2% next year, chemical production though only growing at about 1%. So it’s important to first off as I’m saying prepare for this growth that’s coming in 25 because most all of these subcomponents of manufacturing are growing but it is important to have realistic expectations by understanding which markets will grow faster than others. That’s what we help you with here at ITR and that’s what our Trends Report does a great job at detailing. So I urge you to check that all out.
So in summary, there’s good news today and that’s that manufacturing and industrial production are in recovery and There’s growth on the horizon as we get into ’25 and that growth will persist throughout the year. So don’t fall behind Now is the time to step on the gas, ignore some of the noise from the political environment and really focus on the data. My concern is not businesses surviving the rest of ’24. My concerns is that manufacturers, those participating in the industrial market aren’t prepared for how quickly this growth is coming our way in 2025. So don’t be those people that aren’t prepared. Act now and you’ll find yourselves in a very exciting year as we look ahead to 2025.
Thanks for joining me on this episode of TrendsTalk. I’m Taylor St. Germain with ITR Economics and a lot more fun coming your way over these next few weeks. But for now, please remember to like and subscribe to TrendsTalk wherever you listen to your podcast and we’ll see you on the next one. Take care for now.