Every year about this time we release our annual Wholesale Distribution Economic Trends Report and also produce a Mid-Year Economic Update Webcast. We may be far from the good old days, but most distributors I talk with are more than OK with 2014 so far.
The main takeaway in June 2014: The economy may not be ticking like a GM 250 cubic-inch, straight-6 engine, but we are a lot closer than a year ago. (The inline 6 was Chevy’s main engine from 1929 on, so maybe not the best economic reference point, but a workhorse for decades.) It feels significantly more stable, and the data support that feeling. It’s been a long time since we could say that.
Here are a few thoughts from several data points – our webcast, annual benchmarking report and anecdotal reports from many sectors:
Total revenues of wholesale distributors grew 4.2 percent to $5.1 trillion in 2013. After strong recovery years in 2010 and 2011, we have seen moderating growth in 2012 and 2013. The wholesale distribution industry grew faster than the overall U.S. economy in 2013. Aggregate revenues of wholesale distributors increased 1.4 percentage points more than nominal U.S. gross domestic product as overall economic growth slowed in the fourth quarter of 2013 (2.6 percent) after an impressive third quarter (4.1 percent). Still, fourth quarter 2013 revenues for all wholesale distribution sectors grew 5.8 percent.
MDM forecasts 2014 growth of 4.5 percent in 2014, taking into account strengthening after a weak first quarter (-2.9 percent GDP) largely attributed to weather impacts. The data show that quarterly swings have become part of the new normal. But we are in a much more stable economic environment than 12 months ago, with several benchmarks indicating we have either regained lost ground from the 2008-2009 recession or surpassed previous highs.
One of the biggest shifts from 12 months ago is in investment levels. Based on MDM surveys and research, distributors and manufacturers were reluctant to invest in 2013 because of continued economic instability. That has shifted in 2014, as our current research shows strong investment in sales resources, e-commerce development and broader technology projects.
Now, if we can find a politician who can install a Powerglide automatic transmission into this economy, we will be in good shape. Yes, I am showing my age, but it is a heck of a lot more stable than a flux capacitor in a dot-com DeLorean.