Honest Planning and Soft Landings: Highlights From AMT’s 2024 Winter Economic Forum

At the recent 2024 Winter Economic Forum, hosted by AMT – The Association For Manufacturing Technology, presenters painted an optimistic outlook for both the U.S. economy and the coming need for manufacturing technology.

“We are in a situation where there is a widespread appreciation of supply chain issues and the importance of making things in the United States,” said Douglas K. Woods, president of AMT. “We’ve known that, but now all the people who are buying things, pushing initiatives, and driving funding know that. We all agree that it is mission critical that we make things here in the United States.”

While supply issues have plagued manufacturers over the last several years, orders of manufacturing technology, measured by the U.S. Manufacturing Technology Orders Report published by AMT, have remained at elevated levels despite a mild pullback from their peaks. Economists featured at the forum supported the sentiment expressed by Woods, predicting 2024 would likely bring strong single-digit growth in manufacturing technology orders as well as the long-anticipated soft landing at the conclusion of the Federal Reserve’s efforts to combat inflation.

Throughout the forum, speakers focused on the power of reshoring and increased foreign direct investment. The positive impacts of the Inflation Reduction and CHIPS acts and the bi-partisan Infrastructure law also loomed large in 2024 forecasts.

Amit Sharda, lead economist for Oxford Economics, noted that the firm had upgraded its 2024 forecast for global gross domestic product (GDP) due to a stronger-than-anticipated performance in U.S. GDP. While world GDP is expected to grow 2.3% in 2024, U.S. GDP is expected to grow at 2%, which is higher than previous forecasts.

Manufacturing Technology Rebound in 2024?

Moving from the overall economy to his forecast of manufacturing technology orders, Sharda anticipates an expansion of nearly 8% in 2024. Easing monetary policy and continued consumer spending should contribute to even more significant growth in 2025.

Sharda specifically highlighted the aerospace and automotive sectors as potential drivers of growth in manufacturing technology orders. The automotive industry is undergoing a slow rebound back into productivity following the weekslong UAW strike in the latter half of 2023. While the transition to electric vehicles has led to some attention-grabbing investments, automakers have made significant investments in capital equipment to manufacture traditional internal combustion engines through 2023. This investment is likely to continue, according to Sharda.

The aerospace sector outpaced the general market in their 2023 orders of manufacturing technology. This investment in capital equipment should continue to be kept aloft by new work to support defense projects and the increasing commercialization of space flight.

Stable Is Good

“Demand is stable but flat in most industries,” explained Cara Walton, director of marketing intelligence at Harbour Results, a manufacturing consulting firm. Like Sharda, she emphasized the relative strength of manufacturing compared to the larger economy.

Despite predicting stable demand for manufactured goods, Walton highlighted falling disposable income as the main downside risk. Because the rising cost of goods erodes some of the recent wage gains, consumer demand may not grow at its full potential. While manufacturers may be insulated from smaller economic bumps, Walton emphasized the importance of honest planning for inevitable (and unpredictable) economic cycles.

“Manufacturers have to think about how they are going to grow if the market is not getting larger,” Walton advised. “Are you going to pursue government spending in infrastructure or defense? Are you going to create a new product or go into a new area? There are still options for growth, but you must have a plan.”

You can reach out to Christopher Chidzik, principal economist at AMT, with questions about the event or any general economic inquiries.

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