Skip to main content
Sister Publication Links
  • European Rubber Journal
  • Plastics News
  • Tire Business
web
Subscribe
  • Login
  • Register
  • Subscribe
  • News
    • Automotive
    • Tire
    • Non-Tire
    • Suppliers
    • Silicone
    • Latex
    • Coronavirus
    • Executive Action
    • Government/Legal
    • Opinion
    • Technical Notebooks
    • Women in Tire & Rubber
    • ITEC
    • International Elastomer Show
    • HEXPOL Sponsored Content
    • Combined Goodyear-Cooper Tire company has tire tech, sustainability edge
      Cooper Standard ranked among 'World's Most Ethical Companies'
      Bridgestone claims 'novel' polymer advance under 'TechSyn' collaboration
      New Porsche 911 GT3 to feature Michelin fitment
    • Birla Carbon again recognized for sustainability efforts
      Carlisle TyrFil out with new recycling technology
      Bridgestone claims 'novel' polymer advance under 'TechSyn' collaboration
      New Porsche 911 GT3 to feature Michelin fitment
    • ASC seeks presenters for fall convention
      Birla Carbon again recognized for sustainability efforts
      Carlisle TyrFil out with new recycling technology
      Cooper Standard ranked among 'World's Most Ethical Companies'
    • ASC seeks presenters for fall convention
      Birla Carbon again recognized for sustainability efforts
      Bridgestone claims 'novel' polymer advance under 'TechSyn' collaboration
      Cancarb completes sixth unit expansion
    • Stockwell Elastomerics' legacy moves on
      Larger mixers tout economies of scale, along with the need for speed
      Hexpol, Bloom deal with COVID, reorganization, fire since start of 2020
      Small, mid-size compounders keep value, agility, service 'in the mix'
    • Ohio firm focuses on making better masks in U.S.
      U.S. to increase NBR, make gloves using Defense Production Act
      Tire Cologne canceled; rescheduled for 2022
      Tire Technology Expo canceled for 2021
    • Stockwell Elastomerics' legacy moves on
      Dana Inc. hires Byron Foster in executive role
      Dana hires new senior vice president of global operations
      Borealis appoints Thomas Gengl as CEO
    • ASC seeks presenters for fall convention
      VMI, Safe-Run differ over latest ruling in patent case
      U.S. to increase NBR, make gloves using Defense Production Act
      Commerce reduces import duty for Cheng Shin/Maxxis
    • Column: Discussions of race, equality may mean uncomfortable moments
      Column: Business trips possible because of essential workers
      Editorial: Associations see opportunity for progress under new administration
      Editorial: Against a backdrop of turmoil, M&A deals give glimpse of normalcy
    • Studying RPA ASTM methods for detecting compound quality differences
      Damage mechanism in oil and gas formulations during downhole testing
      Advancements in synchronous drive belt design for industrial and consumer markets
      Effects of multiple repurposed materials for reinforcements of standard rubber compounds
    • Rubber Division introduces WORD webinar series
      WORD panelists say evolution, authenticity keys to success
      New video celebrates women in rubber industry
      ITEC panelists say women can thrive in tire industry
    • Goodyear recognized by Lockheed Martin as 'elite supplier'
      EV tire advancements to help secure future
      Lambillotte: Only question on AVs is timing
      CAR official says EV future brighter than autonomous
    • Rubber Division introduces WORD webinar series
      Rubber Division seeks abstracts for 200th Technical Meeting
      WORD panelists say evolution, authenticity keys to success
      IEC keynote: Communication key to logistics
    • Sponsored By HEXPOL Compounding
      Faster Access to Your Polymer Compounding Experts Around the World
      Sponsored By HEXPOL Compounding
      Take a walk thru a HEXPOL Lab
      Sponsored By HEXPOL Compounding
      HEXPOL offers a unique selection of High Performance Elastomers to match your application requirements
      Sponsored By HEXPOL Compounding
      It’s what you can’t see that makes the Difference at HEXPOL
  • Blogs
    • Products
    • Wacky World of Rubber
    • New Products: Starrett expands field-of-view for multi-sensor vision system
      New Products: Nova thinks outside the box with sealing tech
      New Products: MonTech introduces 1,500 kN lab press
      New products: 3M introduces new durable, pliable medical adhesive
    • Wacky World of Rubber: How Trelleborg, teens sealed a spot in the world record book
      Wacky World of Rubber: Of chicken and feet, but not chicken feet
      Wacky World of Rubber: Time to go mattress shopping
      Wacky World of Rubber: Because nothing says football like 'frunk' shrimp
  • Newsletters
    • Rubber in Automotive
    • Silicone News
    • Latex News
    • Sign Up for Newsletters
    • Combined Goodyear-Cooper Tire company has tire tech, sustainability edge
      Cooper Standard ranked among 'World's Most Ethical Companies'
      Bridgestone claims 'novel' polymer advance under 'TechSyn' collaboration
      New Porsche 911 GT3 to feature Michelin fitment
    • Stockwell Elastomerics' legacy moves on
      Larger mixers tout economies of scale, along with the need for speed
      Hexpol, Bloom deal with COVID, reorganization, fire since start of 2020
      Small, mid-size compounders keep value, agility, service 'in the mix'
    • Combined Goodyear-Cooper Tire company has tire tech, sustainability edge
      Helixtap launches new digital marketplace for rubber
      Helixtap starts up digital platform for rubber trading
      European Rubber Journal acquired by NUERJ
  • Multimedia
    • Videos
    • Photo Galleries
  • Directory
  • Resources
    • Classifieds & Mold Mart
    • Sponsored Content
    • White Papers
    • Sponsored By HB Chemical
      Above and Beyond with HB Chemical
      Sponsored By HB Chemical
      The Company Behind the Inventory
      Sponsored By French Oil Mill Machinery
      Process Improvement, Cost Reduction with Custom Press Systems
      Sponsored By HB Chemical
      Above and Beyond with HB Chemical
    • Sponsored By Uncountable Inc.
      Labs of the Future: How to Choose a Laboratory Information Management System in 2021
      Sponsored By Uncountable Inc.
      Cooper Standard deploys lab informatics platform to synchronize R&D
      Sponsored By Elkem
      LSR Select™: A solution to improve your financial impact in molding applications
      Sponsored By HEXPOL Compounding
      Peroxide Cureable Silicone Injection Molding
  • Data
  • Events
    • RPN Events
    • RPN Livestreams/Webinars
    • Industry Events
    • Past Events
    • ITEC Library
    • International Silicone Conference Library
    • 2021 Healthcare Elastomers Virtual Edition
      2021 Rubber in Automotive Virtual Edition
      2021 International Latex Conference Virtual Edition
      2022 ITEC
  • Advertise
  • DIGITAL EDITION
MENU
Breadcrumb
  1. Home
  2. Financial
December 10, 2019 09:29 AM

Recession not likely, but auto concerns grow for 2020

Chris Sweeney
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print
    Chris Sweeney, Rubber & Plastics News
    Roger Tutterow, a professor of economics at Kennesaw State University, discussed the U.S. economy during his keynote address at the 2019 Hose Manufacturers Conference, held recently in Cuyahoga Falls, Ohio.

    CUYAHOGA FALLS, Ohio—After 11 years of economic expansion in the U.S., some people are starting to get antsy about a recession.

    Roger Tutterow, a professor of economics at Kennesaw State University, alleviated some of those concerns with his presentation at the 2019 Hose Manufacturers Conference, held Nov. 12-13 in Cuyahoga Falls, Ohio.

    While he said there still is about a one in three chance of a recession, he added that, despite a slowing economy, a recession is not the most likely trajectory in the near term.

    "I don't think economic expansions die of old age," Tutterow said. "I think economic expansions die because of bad policy. Because of asset levels that build and pop, because of an over-accumulation of inventories and because of a portfolio of what we economists call exogenous shocks—terrorist attacks, oil embargoes and military excursions. Things that we, quite candidly, can't forecast."

    Zooming in

    Tutterow added that looking solely at gross domestic product doesn't tell the whole story for the U.S. economy in 2019 because sometimes industries produce more than they sell, which leads to inventories. And when those same industries sell more than they produce, those extra sales are generated from inventories.

    "Remember, when you look at economic data, make sure you understand what it's measuring and how it's put together," Tutterow said. "When I'm trying to get my arms around how we, as a nation, are doing at not just producing product, but selling it in the same quarter, I need to back out inventories."

    He said that GDP grew 3.1 percent in the first quarter of 2019 and 2 percent in the second, which on the surface would indicate that the economy slowed down.

    Tutterow said the 3.1 percent in the first quarter was aided by about 0.6 percent of inventory rebuild. Remove that, and the growth becomes 2.5 percent. The second quarter slowdown was accomplished despite the fact that inventories took about 0.9 percent off of the number. Tutterow said if you add that back, growth wasn't as bad as GDP indicated.

    He added that while three of the four categories comprised of GDP—investment, trade and government—currently have their various degrees of uncertainty, the consumer, that all-important fourth category, has not abandoned the U.S. economy.

    "What is keeping this economy afloat, what has prevented us from going into a recession in the second half of 2019, is the consumer," Tutterow said. "Main Street America has not abandoned the economy yet. If we have a recession in 2020, it will be known as the recession that we talked ourselves into. Because the media coverage about trade wars, impeachment and economic slowdown is very different than what the economic fundamentals underlying the economy say."

    Trade impact

    Still, Tutterow didn't discount the impact of trade negotiations on the U.S. economy.

    "President Trump thinks America's trade deals of the past haven't been fair to American manufacturers," he said. "I'm not saying right or wrong, I'm just saying he believes it's time to hit reset on the trade deals of the past."

    Tutterow said that overall free trade is a good thing for the global economy, but that assumes no other distortions are present in the system. The global economy is littered with distortions—tariffs, currency manipulation, etc.—and removing or adding one doesn't necessarily solve the overall problem.

    He theorized that President Trump is concerned with rising interest rates because if the Federal Reserve were to increase them, it would place upward pressure on the dollar and in turn offset the effects of the tariffs he's using to try to level the playing field.

    Either way, Tutterow said that as long as there is uncertainty on the trade front, economic investment will continue to stall.

    "I do think that the uncertainty associated with trade wars are weighing on the corporate sector," Tutterow said. "Who's going to commit capital to long-term investment if they're unclear of what the rules of the game will be."

    Automotive concerns

    Light vehicle sales in the U.S. have leveled off since breaking the 17 million mark in 2015. While the industry has sold at least 17 million in each of the last four years, sales peaked at 17.53 million in 2016 before falling to 17.25 million in 2017 and slightly rebounding to 17.33 million in 2018.

    Uncertainty surrounding the government shutdown in December 2018 led to a weak month of consumer confidence, but retail sales have since rebounded in early 2019.

    For 2019, light vehicle sales in the U.S. are projected to dip below 17 million, Tutterow cited a forecast of 16.6 million. He added that most of the pent-up demand from the Great Recession of 2008 was satisfied by 2015. And even though vehicles are lasting longer, that also means they're being financed longer.

    There is one caveat, however: a disproportion amount of light vehicle sales to fleets as opposed to consumers.

    "So far, at least, we've done a little better in 2019 than we expected in the aggregate absorption of domestically produced motor vehicles," Tutterow said. "Here's the problem, my buddies in the industry tell me that there's a bit of a disproportionate absorption from fleet sales. If you take the fleet sales out, the American consumer probably pulled in their horns on motor vehicles more than what the headline numbers might suggest."

    Letter
    to the
    Editor

    Rubber & Plastics News wants to hear from its readers. If you want to express your opinion on a story or issue, email your letter to Editor Bruce Meyer at [email protected].

    SIGN UP FOR NEWSLETTERS
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    Get our newsletters

    Staying current is easy with Rubber & Plastics News delivered straight to your inbox, free of charge.

    Subscribe Today

    Subscribe to Rubber & Plastics News to get the best coverage and leading insights in the industry.

    SUBSCRIBE
    Connect with Us
    • LinkedIn
    • Facebook
    • Twitter

    MISSION

    To serve companies in the global rubber product industry by delivering news, industry insights, opinions and technical information.

    web
    Contact Us

    2291 Riverfront Pkwy, Suite 1000
    Cuyahoga Falls,
    OH 44221

    Customer Service:
    877-320-1726

    Resources
    • About Us
    • Digital Edition
    • Contact the Staff
    • Advertise
    • Order Reprints
    • Privacy Policy
    • Privacy Request
    • Terms of Service
    • Careers
    • Ad Choices Ad Choices
    • Sitemap
    Partner Sites
    • Tire Business
    • European Rubber Journal
    • Plastics News
    • Plastics News China
    • Urethanes Technology
    • Automotive News
    • Crain Brands
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • News
      • Automotive
      • Tire
      • Non-Tire
      • Suppliers
      • Silicone
      • Latex
      • Coronavirus
      • Executive Action
      • Government/Legal
      • Opinion
      • Technical Notebooks
      • Women in Tire & Rubber
      • ITEC
      • International Elastomer Show
      • HEXPOL Sponsored Content
    • Blogs
      • Products
      • Wacky World of Rubber
    • Newsletters
      • Rubber in Automotive
      • Silicone News
      • Latex News
      • Sign Up for Newsletters
    • Multimedia
      • Videos
      • Photo Galleries
    • Directory
    • Resources
      • Classifieds & Mold Mart
      • Sponsored Content
      • White Papers
    • Data
    • Events
      • RPN Events
      • RPN Livestreams/Webinars
      • Industry Events
      • Past Events
      • ITEC Library
      • International Silicone Conference Library
    • Advertise
    • DIGITAL EDITION