June 23, 2025

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 sorts of economic intelligence and today I wanted to discuss the Industrial economy, especially in light of all the uncertainty that we’ve been dealing with here so far.

I have good news as it relates to Industrial Production. The growth rates, both quarter-over-quarter and year-over-year are positive as I sit here in June. Now again, the data does lag about a month behind. We’re really looking at data that’s a month old at this point, but boy is it encouraging to continue to see that this data is improving. The year-over-year growth rate is up 0.5%, the quarter over quarter growth rate is up 1.5%. Anytime the 3/12 growth rates above the 12/12 growth rate, that’s a positive sign. That means there’s more growth coming our way. We are forecasting that 0.5% growth rate, that annual growth rate, to improve to a positive 1.4% growth rate as we get to the end of 2025. And then we expect another 1.5% growth in 2026.

So really what I’m detailing, the worst is behind us. In 2024, the Industrial economy was seeing growth rates below zero. Those negative growth rates came and went and as a result, we are seeing positive activity building. And I think it’s a message that everyone needs to hear right now because I know there’s still a lot of uncertainty out there in the economy, especially as it relates to trade policy. There’s geopolitical challenges out there. We’re seeing new challenges in the Middle East, but we continue to see the data improving. We need to be preparing for growth. Don’t read into the media. Don’t read into the uncertainty. There’s a lot of growth out there.

Now, one thing I do want to highlight, it’s clear where a lot of this growth is coming from. We look at US Industrial Production in terms of high-tech, and then excluding high-tech. If you look at what I’d like to call legacy Industrial Production or Manufacturing, that’s the excluding high-tech segment. That segment’s basically been flat for two decades. So when you think of automotive, when you think of oil and gas, when you think of mining, when you think of machinery, that trend over time has generally been flat.

So the question is, where is this growth coming from? Well, it’s really coming from the high tech sector. If you look at Industrial Production in terms of only high-tech industries, we’ve seen almost a linear growth trend over the last two decades. Now, when I say high-tech, I’m referring to communications equipment, semiconductors, computer and electronics. And it’s clear that’s where a lot of the growth in this industrial economy has shifted to.

So make sure you’re positioning yourself to penetrate some of these high-tech industries or sell to some of these high-tech industries. It’s really what’s generating a lot of the demand. And we would expect that to continue into the future. Semiconductors are a great example of that. Our semiconductor billings here in the United States are at a record high today. It’s clearly driving a lot of that positive sentiment. But you’ve got, again, semiconductors, you’ve got computer electronics data centers continuing to grow rapidly.

Make sure you’re positioning yourself and your business well for success in the future. If there’s anything you take away from this podcast, I know there’s a lot of what I’ll call ugly sentiment out there in the media. But when we here at ITR sit and look at the underlying data, we continue to see improvement throughout the recent history and we continue to expect improvement as we move into the future.

It’s time to prepare for growth. I think that’s an important message that everyone needs to hear right now. If we’re not preparing for growth, I think we’re gonna be in a challenging situation as we move late into 2025 and certainly into 2026, where we’ll find ourselves in a position where we’re not prepared to take on all the growth that’s coming.

I’ll continue to update you on Industrial Production and our major macroeconomic series on future episodes of TrendsTalk. Thanks so much for joining us. Please remember to like and subscribe to TrendsTalk wherever you listen to your podcasts. I look forward to seeing you all in the next one. Thanks so much. Take care for now.