For the past months, PPC has made it a top priority to get our members the information and resources they need to survive—and even thrive—during COVID-19. Back in June, we shared an economic outlook from renowned economist and Emory University professor, Jeff Rosensweig, on the future for the paperboard market.
What has changed in the last three months? We recently hosted Jeff again, and below you’ll find details and insights from his latest forecast.
The U.S. Economy: Hope on the Horizon
In his last presentation to PPC, Jeff forecast a slow return to normal. Yet in promising news, the latest statistics show more recovery than first expected.
As essential businesses, paperboard manufacturers have been fortunate enough to avoid much of the impact of COVID-19. Other industries faired much worse. Leisure and hospitality were hit the hardest, citing over 7.5 million lost jobs in April, while others like retail trade, health care, and construction were greatly affected. That being said, all of these industries have seen positive job growth from May through July.
Concurrently, the spike in unemployment claims has started seeing greater declines. While continued claims have decreased since May, pandemic unemployment assistance finally saw a more sustained downturn in early July. Both of these signs suggest that people are getting their jobs back, meaning that the depression only lasted for two months.
Along with these job trends, there has been an increase in housing starts. More ground is being laid for businesses, but not necessarily for in-house operations. E-commerce continues to skyrocket during the pandemic, and companies will need more space to house goods to fulfill shipments.
Canada Leads the North American Outlook
Canada experienced a smaller impact from COVID, with fewer deaths and less economic strain than the United States. This gives them a head start for rebounding from the pandemic, and they are expected to have a higher GDP than the U.S. through 2024.
Mexico, on the other hand, took a hard hit from COVID-19. They are expected to spend most of 2021 rebuilding from the effects of the pandemic but will begin to gain more traction in the following years.
What to Expect from a Biden Presidency
There is much contention over the 2020 election, which begs the question, what we can expect from a Biden presidency? Due to more liberal policies, we would likely see a lot more spending from a Biden administration, especially if the Democratic party takes majority control of the Senate as well. Between more COVID-related relief for the public and other programs like the Green New Deal, government spending could be unprecedented—up to $6 trillion.
Additionally, we can expect higher taxation rates. Not only will businesses have to pay more, there will most likely be an increased tax on citizens, as well. The “super wealthy,” who make annual salaries of $400,000 or more will also experience tax hikes on regular earnings.
We’re Not Out of the Water Yet
Despite positive news and promising industrial trends, the United States is not completely in the clear. There is still the chance of experiencing a “W,” otherwise known as a double-dip recession.
Even though the DOW keeps rising, providing the appearance of stability, a lot of this activity is due to the fear of missing out. People see stocks rising and want to be a part of that growth. However, if stocks rise too high and people start pulling out, or if they lose confidence in the economy, we might have another crash on our hands. Other factors including an increase of COVID infections or another round of mass layoffs could lead to another recession.
Stay Secure with PPC
No matter where the economy goes, PPC is here to help make sure all paperboard manufacturers stay competitive and successful. We provide access to resources, industry news, and a network of peers to help your team navigate any challenges caused by the economy or capitalize on all future successes. Best of all, new members can save 20% off their membership during 2020. Learn more about us and our benefits here.