2014 will be year of improving fundamentals for US economy – ACC

NEW YORK (ICIS)–The US economic outlook for 2014 is very much positive with key components such as industrial production, personal income and employment set to improve further, the chief economist of the American Chemistry Council (ACC) said on Wednesday.

“2014 will be a year of improving fundamentals and we could see positive surprises. The risk is to the upside,” said Kevin Swift, chief economist of the ACC.

Swift spoke at a meeting of the Chemical Marketing & Economics Group in New York.

Manufacturing has driven the US economic recovery since 2009 and will continue to do so in the coming years. This has been aided in no small part by the US shale gas boom, he noted.

“We have reached a tipping point in manufacturing. This tipping point in downstream consumer industries [of the chemical sector] points to strong domestic demand, which also aids specialty chemicals,” said Swift.

The economist pointed to new manufacturing facilities being built in the US such as four tyre plants in South Carolina. In the state, Michelin is building a new facility and expanding an existing plant, while Bridgestone and Continental are each building new tyre plants.

Along with the US, “the global industrial cycle is beginning to turn upwards”, with Europe now emerging from its second recession and China and emerging markets poised to improve, he added.

Inflationary pressure is largely non-existent, and monetary policy is accommodative worldwide, with various versions of QE [quantitative easing]”, said Swift.

For the strong US economic progress since 2009, “nothing on the horizon suggests that this will end. We should see at least a couple more years of a good run”, he said.

The only lagging component of the US recovery has been employment, noted the economist.

However, consumer spending has been on the rise, partly on the “wealth effect” from increasing real estate values, he said.

As a leading indicator, the ACC’s Chemical Activity Barometer (CAB) also points to accelerating industrial production in 2014, said Swift.

The CAB index includes components such as chemical prices, volumes and company stock values.