Uncertainty Taints Positive Economic Outlook - Modern Distribution Management

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Uncertainty Taints Positive Economic Outlook

Several factors are contributing to a less than favorable outlook in the economy, despite strong distributor sales growth.

The U.S. economy’s growth slowed as expected in the first quarter 2012, according to the latest report from the Commerce Department, coming in at a 1.9 percent rate.

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That said, a report from The Federal Reserve Bank of Chicago also provides a bit of optimism. At its recent Automotive Outlook Symposium, economists forecasted the U.S. economy will grow at what they called a “solid pace” in 2012 and 2013 – between 2.3 percent and 2.6 percent, near the historical trend. The housing sector, which has lagged the recovery, is predicted to improve through 2013, with a surge in residential investment of 12.2 percent in 2012 and 13 percent in 2013. Housing starts are also expected to rise – up to 850,000 units in 2013.

We still aren’t seeing a sharp recovery post-recession – as the Federal Reserve report pointed out, recoveries that follow recessions associated with financial crises tend to be more restrained. “The current business cycle is following this pattern of tepid growth,” the report said.

But overall most distributors we spoke with recently for the 2012 Distribution Trends Report told us that they have seen strong growth over the past year, and for some, depending on sector, revenues are back to 2008 levels. However there is some uncertainty there, in part due to its being an election year and due to unknowns surrounding unresolved tax issues going into 2013. The recent European financial crises have also contributed to the uncertainty.

That’s holding some back from making investment in expansion right now, even as demand remains strong.

Learn more about some of the current trends facing distributors in the following clip from the latest MDM Executive Briefing. Watch or download the full program at www.mdm.com/executivebriefing.


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