Blending Revolution
Published

Outlook for Consumer Goods: Moderately Improve

Wood on Plastics

Our forecast for total U.S. production of consumer goods calls for a gain of 3% in 2012 following a rise of just over 2% in 2011.

Share

Our forecast for total U.S. production of consumer goods calls for a gain of 3% in 2012 following a rise of just over 2% in 2011. This forecast is based on continuation of the prevailing economic fundamentals that have the greatest effect on consumer spending. These include moderate improvement in the employment data, stability in house prices, a gradual increase in access to credit, and slow but steady gains in household incomes. The risks to this forecast are biased towards the downside at the present time, but we expect 2012 to be moderately better than 2011 for most suppliers of consumer products.

The accompanying chart shows the rate of growth in U.S output of consumer goods. Production of these goods declined by 1% during the recession of 2001, and output plunged by 8% in the Great Recession of 2009. Current production of consumer goods in the U.S. is still not back to its pre-recession level.

One other trend that bears mentioning is that, excluding periods of recession, the long-term annual growth rate for consumer products is only in the range of 1-2%. This is close to the overall rate of growth in the number of households in the U.S. and it is actually a bit higher than the average annual gain in median household income over the past decade. So from a perspective of long-term demographic trends, the consumer products sector tends to chug along at an “average” rate of growth. But that is not the only factor that has significantly affected the gains in this sector in recent years.

Though there are no official statistics to prove it, most people would agree that both the volume and array of consumer products available to American consumers have expanded at a much faster rate than 2% annually in recent years. And a case can certainly be made that the prices of many of these products have actually declined. So except during times of recession, the actual volume of consumer products purchased by Americans tends to grow faster than 2%/yr. For the past two decades, this rising demand has been met by increasing the level of imports of consumer products.

It is no secret that these industries have been buffeted in recent years by imports from countries such as China, and this will continue to be the case for the foreseeable future. But there is mounting evidence to suggest that this trend will also improve gradually in the coming years. There are several reasons for this. Though it is still very early in the process, the Chinese middle class is expanding, and therefore China’s economy is slowly shifting towards producing for its own domestic consumption rather than export.Global energy and materials prices are rising at a rate that will make it increasingly expensive to ship low-margin products from Asia. Global financial forces continue to exert upward pressure on the value of the Chinese currency. And finally, there is a rising consciousness among American consumers that paying a bit more for domestically manufactured products is actually cheaper in the long run.


WHAT THIS MEANS TO YOU


•Consumer products designed to mitigate rising food and energy prices will become increasingly attractive.

•Be aware of demands imposed by big-box retailers such as Wal-Mart that their suppliers furnish products containing recycled content or that are in some way “sustainable.” These demands will trickle down to you.

•It won’t happen overnight, but China will eventually become less of a force in this market.

Windmoeller
mold, mould track, digital tracking, molding
New 2024 Twin Screw Report
RoyAlloy Stainless Mold Base Steel
Create custom Smartflow assemblies on-line, 24/7.
Realationships
Konica Minolta
NPE2024: The Plastics Show
AM Workshop
Vacuum conveying powders to extruders compounding
New Tinius Olsen VectorExtensometer testing

Related Content

sustainability

Colored PET: Pretty To Look At; Headache For Recyclers

Plastics Recyclers of Europe believes that 'colorful’ future trends will weaken the image of PET as a recycled product.

Read More
Materials

How to Dry PET for Container Applications

PET is extremely hygroscopic, highly moisture sensitive, and one of the toughest challenges to dry. Here are the basic principles of doing it right for rigid packaging applications

Read More
dies

What You Need to Know to Make World-Class Stretch Film

Advances in materials, feedblock/die technologies, and winding can help processors develop more sophisticated cast-stretch products.

Read More

Recyclable All-PE Pouches: Sustainable Opportunity for Film Extruders

Sustainability and the Circular Economy are both a challenge and an opportunity to flexible packaging producers. Recyclable pouches based on all-PE multilayer structures, utilizing new resins and perhaps techniques like MDO or biaxial orientation, appear to be major contenders against glass, metal, and multi-material film structures.

Read More

Read Next

best practices

People 4.0 – How to Get Buy-In from Your Staff for Industry 4.0 Systems

Implementing a production monitoring system as the foundation of a ‘smart factory’ is about integrating people with new technology as much as it is about integrating machines and computers. Here are tips from a company that has gone through the process.

Read More
Extrusion

How Polymer Melts in Single-Screw Extruders

Understanding how polymer melts in a single-screw extruder could help you optimize your screw design to eliminate defect-causing solid polymer fragments.  

Read More
New Tinius Olsen VectorExtensometer testing