In this special event series, ISRI News is in Chicago covering The Roundtables. The annual event attracts processors, brokers, traders and other recycling professionals from around the world.
Have we seen the worst of inflation or is there more to come? Thomas Walstrum, senior business economist in the economic research department at the Federal Reserve Bank of Chicago shared his thoughts on what is happening in the economy and what the future could look like, with a specific focus on the manufacturing sector during the Economic Outlook General Session at The Roundtables.
The question on a lot of people’s minds: are we headed for a recession? Based on the data Walstrum presented it points to no. Real gross domestic product (GDP) is expected to grow slowly. Projections put it at 1.2% for the coming year. This doesn’t mean we’re off the hook, “If inflation doesn’t go down…If regional bank turmoil spills to other sectors of the economy…the war in Ukraine are all risks to GDP,” Walstrum explained.
Another challenge to keep an eye on is commercial real estate. The pandemic caused a massive shift in how offices operate, which has left investors with this kind of real estate up in the air as the market works out new values for the sudden emergence of unused office space. There is hope that this will be a slow enough process to not cause a major shock in the market.
Of interest to everyone in the recycled materials industry was the data on manufacturing. “Projections show that manufacturing is in a mild recession until mid-2024,” Walstrum explained. He also shared that manufacturing has historically been a slow growth sector for a variety of reasons including rising incomes, which have led people to spend more on services and experiences, and less on tangible goods. According to estimates Walstrum shared, long run real GDP is expected to reach 2.2% while manufacturing production is expected to reach 1.7% during that same period.