Recession Depends on the Definition: US Economy Poised for 1.8% Expansion

According to ACT Research’s (ACT) latest State of the Industry: NA Classes 5-8 Report, ACT projects that the US economy is poised to expand by 1.8% in 2020

“The risk of an economy-wide recession that was a growing concern through Q3’19 has largely faded, with healthy consumer fundamentals expected to provide sufficient momentum to get through the slow patch in industrial activity,” said Kenny Vieth, ACT Research’s President and Senior Analyst. He continued, “That said, the manufacturing recession continues, and the supply-demand imbalance between trucks and freight currently weighing on carrier profitability is likely to extend deep into 2020.”

Speaking about the Class 8 market, Vieth said, “For those keeping score, 2019 was the second-best year in history for Class 8 production, trailing only the EPA’07 prebuy-driven volumes of 2006. While a downturn is expected this year, the silver living is that the expected production decline in 2020 will pale compared to the 42% drop recorded in 2007.”

Regarding the medium-duty markets, he commented, “Choosing not to do a 50-year lookback, we are calling 2019 the new record year for medium duty vehicle production, eclipsing the previous record set in 1999. And although the cycle is shallower, it isn’t so different from the heavy-duty experience over the course of last year, including lower orders, inventory building and a sharp decline in backlogs that will constrain the industry in 2020.”

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