Market Segment
Steel Summit: Beaulieu’s Handbook on What’s Ahead For 2024
Written by Becca Moczygemba
August 27, 2023
Many economists warned of a recession in early 2023, but it wasn’t on the radar for ITR Economics.
Alan Beaulieu, president of ITR Economics, joined us again at Steel Summit to talk about what is on the horizon for 2024.
“The US industrial production and global production have a very synchronous relationship,” said Beaulieu. “The 12-month rate of change is going to feel some downward pressure in 2024.”
Iron and steel product production is expected to descend to a third-quarter low in 2024 but inch back up in 2025, Beaulieu stated.
“China is becoming more of a problem going forward with mounting risks,” said Beaulieu. As geopolitical risk increases for supply chains and weighs heavier on people’s minds, there has been a movement away from China.
Beaulieu noted that the US’s largest trading partner is now the European Union. And as the US bond with the EU gets tighter, its bond with China gets weaker. Additionally, China is experiencing a decrease in its labor participation rate.
“With a lack of labor comes a lack of taxes,” said Beaulieu. “Machines don’t pay taxes. And with China’s aging population, it’s a problem.”
The forecast for the US economy is expected to be relatively flat for 2024. However, industrial production is expected to see a mild recession. “The 12-month rate of change is going down. There’s downside business cycle pressure that will see a low in late 2024,” he noted. “But you’re going to like 2025, 2026, 2027, 2028, and 2029.”
Unfortunately, if industrial production declines due to interest rates, steel production will decline. “There will likely be more banks failing in 2024,” said Beaulieu. “There will be more pressure on weak businesses and people who don’t have a lot of money.”
Beaulieu pointed out that we are currently in a disinflation for the overall economy. Energy prices are lower than they were one year ago and that is bringing inflation down. However, Beaulieu expects that inflation will be with us for the rest of the decade, at an on-again-off-again capacity.
Looking ahead, Beaulieu says, “Expect a macro recession to begin in the second half of 2023 and extend through 2024, housing will be in recovery in 2024, and commercial construction will peak in the third quarter of 2024.”
Want more of the discussion? Join us at Tampa Steel, Jan. 28-30, 2024. Click here to register!
Becca Moczygemba
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