Page 30 - Wire Rope News & Sling Technology - December 2019
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continued from page 28             and domestic economy,  Moody’s ex-  important, as  two-thirds  of  the  na-
         of the China trade wars. “Uncertainty   pects  corporate  profit  to  increase  by   tion’s chief financial officers expect the
         about international  trade rules  can   only  1.9%  when  figures  for  2019  are   United States to tip into an economic
         throw  havoc  into  the  production  sys-  finally  tallied.  This  less  than  stellar   downturn by the third quarter of 2020,
         tem,” says Conerly. And that havoc is   increase only adds  to the uncertainty   according  to  a  Duke  University/CFO
         only  intensified  by  the  complexity  of   that is keeping companies from invest-  Global Business Outlook survey. In the
         modern  supply  chains.  “Parts  for  fin-  ing in the very capital projects that can   early  months  of  the  new  year econo-
         ished goods are coming from multiple   help drive economic growth. The tariff   mists  suggest  monitoring  financial
         countries. The more complex the chain   situation grew more challenging in the   news for indicators of a recession, often
         the less resilient it is, and the more op-  closing months of 2019.   defined as two consecutive quarters of
         portunity for things to turn bad.”   Moody’s expects better results in 2020,   negative economic growth.  Increasing
           Adjusting to supply chain disruption   when  corporate  profit  growth  should   stock volatility is one such  indicator,
         is easier said than done. “Some of our   increase  by  some  4.9%.  “Contributing   as is an inversion in the Treasury yield
         companies are trying to move their   to the rebound is a weaker U.S. dollar,   curve when short term rates are higher
         supply chains  out of China, but that   which will improve the competitive po-  than long term ones.
         means abandoning long held relation-  sitions of U.S. goods, so that profits from   But perhaps the most important in-
         ships,” says Palisin. “Validating  new   abroad will increase,” says Koropeckyj.   dicator of pending trouble is a down-
         suppliers is costly and time consuming.   She  adds  that  while  the  2020  figure   turn in the employment picture. “The
         Smaller  and mid-sized companies,  in   looks comparatively robust, it remains   job market is key,” says Koropeckyj.
         particular, do not have the resources to   weaker than the average 5.2% growth   “If businesses begin to lay off workers,
         quickly find new sources of materials.”  between 2009 and 2018.”      that will be fodder for recession. Watch
           Lending urgency to the supply chain                                 for changes  in monthly employment
         disruption is the knowledge that long-  THE ROAD AHEAD                growth and in weekly claims for unem-
         established relationships, once lost,   Despite the uncertainty that charac-  ployment insurance benefits.”
         can  be  difficult  to  restore  once  trade   terizes many areas of the economy, a   Rising unemployment, says Koro-
         tensions  ease.  And  on  the  flip  side  of   healthy labor market and high consumer   peckyj,  will  result  in  a decline  in  the
         the  trade  coin,  domestic makers  fear   confidence have done a good job propping   very consumer spending that has been
         losing  their overseas markets perma-  up a decelerating business environment.   the driving gear of a healthy economic
         nently to rivals from other countries.  Will they continue to do so? And when   machine.  “Once  unemployment starts
           In a reflection of these supply chain   will the inevitable recession arrive?  rising, we are either already in a reces-
         disruptions and of the slowing  global   That last question  is  particularly   sion or will be in one very soon.”  WRNWRN



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