Manufacturing, global economy 2024-2025: Short-term pain, then growth

Parts of the global economy and various industries will either have a recession or flat year followed by several strong years ahead.

By Chris Vavra January 16, 2024
Courtesy: Chris Vavra, CFE Media and Technology

Manufacturing and automation insights

  • Despite the GDP remaining flat or slightly down in 2024, economist Alan Beaulieu predicts a mild recession until December. Companies urged to invest in automation and robotics for future growth.
  • Beaulieu emphasizes preparing for 2025 as economic conditions improve. Lingering COVID-19 effects lead to a correction rather than a sharp decline, urging businesses to retool for the future.

The economy runs in cycles, and this is certainly true for different parts of the manufacturing industry. While the gross domestic product (GDP) is expected to be flat or slightly down in 2024, it might not result in a recession. Or at least not a typical recession of two straight quarters of decline, said Alan Beaulieu, principal and president of ITR Economics, at his presentation “Anticipate Business Cycle Changes,” at the A3 Business Forum in Orlando.

Looking at only industrial production, though, Beaulieu said the economy is in a recession and will continue to December 2024.

In the short-term, the upcoming U.S. presidential election will have no impact on what’s happening.

“The economy will do what the economy is going to do,” he said.

It will be a mild recession, more of an irritant than a serious concern, similar to what happened in the early 2000s. Many companies, Beaulieu said, will be doing a slow walk, recalibrating their focus and preparing for the future.

The key, he said, is to get ready for 2025 now when economic conditions are expected to be better and take advantage of the situation by investing to meet the future demand. Companies that don’t do this, he said, will be playing catch-up over the next several years.

Many manufacturers will be doing a slow walk when they should be spending now to get ahead of economic trends, said economist Alan Beaulieu in his presentation “Anticipate Business Cycle Changes,” at the A3 Business Forum in Orlando. Courtesy: Chris Vavra, CFE Media and Technology

Many manufacturers will be doing a slow walk when they should be spending now to get ahead of economic trends, said economist Alan Beaulieu in his presentation “Anticipate Business Cycle Changes,” at the A3 Business Forum in Orlando. Courtesy: Chris Vavra, CFE Media and Technology

“It’s a good time to retool for the future if you can get someone to say yes,” he said.

Investing in automation, particularly in robotics, is a good starting point.

“Robots create jobs and grow the economy. People who use robots employ more people than those who don’t,” he said.

Not a typical industrial recession

The recession for many industries will not mean a sharp decline, but rather reverting back to a new cycle because of the effects of COVID-19 still lingering in the distance. A lot of money had been funneled into the economy to keep things going during shutdown, which created inflation, Beaulieu said.

What’s happening now, he said, is more of a correction and reverting back to a different normal that is different than what people had experienced and expected from a business and personal standpoint in the 2010s when interest rates were low and it was easier to get free money.

Slow-moving changes, impact of labor market on industries

Challenges persist, however, with the labor market continuing to be a problem. The low birth rate in the United States combined with a lack of immigration continues to be an issue with millions of jobs unfilled. Even with higher immigration, Beaulieu said, it won’t change the dynamics because a higher birth rate is not an immediate resolution because it takes a couple decades for that to take hold.

Another factor that will take time to feel its effects is artificial intelligence’s (AI) impact on the world.

AI is going to slowly revolutionize the world, but it’s not going to happen as quick as people think,” he said. “It takes a decade to work its way through the system. It’s important you’re on it, but don’t expect AI to change the world overnight. Nothing works that way. The adoption process is not that fast.”

AI certainly has opened eyes and offered potential solutions that have changed how people do their jobs, but it hasn’t become far-reaching quite yet. The changes, personified in a sense through ChatGPT, are an overture of what will come soon.

Beaulieu said to expect a mild recession in 2024 followed by several years of general industry growth.

Beaulieu said to expect a mild recession in 2024 followed by several years of general industry growth. Courtesy: Chris Vavra, CFE Media and Technology

Manufacturers, consumers prepare for the future

Much as he said last year, Beaulieu expects another great depression in 2030 due to three factors:

  1. The world is aging. Baby Boomers will be taking more out from the government and not putting money back in.

  2. Deficit spending. Too much debt, he said, puts added pressure on the bond market, which could lose confidence. That, in turn, increases the amount of money governments have to spend.

  3. Rising interest rates. This factor, combined with the increasing debt many countries carry, will leave less to go around for companies and consumers.

While this sounds bleak, Beaulieu said getting in front of this problem, investing now and being fiscally responsible can help lessen the blow expected to happen several years down the road.

“The most important thing to understand the decisions you’re going to have to make are life-changing and lasting for years,” he said. “It will be your opportunity to right things.”

Chris Vavra, web content manager, CFE Media and Technology, cvavra@cfemedia.com.


Author Bio: Chris Vavra is web content manager for CFE Media and Technology.