The 2020 Mid-Year Economic Update_long

2015 Setting Up a ‘Reprise’ of 2014

ISM CEO: Signs point to a stronger second half.
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The first quarter of 2015 started out much like the first quarter of 2014: Disruptions halted the positive trajectory of the economy, reintroducing uncertainty just after optimism returned. But signs are pointing to a more positive second half once again, according to Tom Derry, CEO of the Institute for Supply Management.

"There's a lot of mixed data," Derry says, "but our view is that we're in a bit of a slowdown. … Based on the conditions we're seeing right now, though, I wouldn't be surprised if we saw a reprise of sorts in the back half of last year."

Oil prices continue to be one of the most significant headwinds, simply because it has such a broad-based impact across sectors, Derry says, but one of the other impacts is perception.

"There's still a lot of uncertainty out there in terms of the strength of demand going forward," Derry says. But based on ISM's research and reports, underlying demand is relatively stable, and if companies can make the necessary adjustments for current economic conditions, they can build growing businesses.

One of the long-term supply chain impacts, however, will likely continue even if oil prices and production normalize and as construction rebounds: Increased competition for labor in these areas will continue to strain the labor pool that also supplies truck drivers.

"Until very recently, there have been very attractive alternatives," Derry says. "People found that the work is higher paying, more satisfying and less stressful, in some respects, if you move to North Dakota to work the Bakken shale fields."

And while oilfield employment isn't growing right now – and in some cases, is being cut because of oil prices – for most, it's stable, he says. Production companies, overall, are maintaining output and production; they just aren't expanding it right now.

The solution may require structural reform – finding a way to make truck driving one of those more attractive career options.

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