ACC Economic Forecast Projects Downside Risks Linked To COVID-19

April 20, 2020
The American Chemistry Council releases an abbreviated, interim update to its Chemical Industry Situation and Outlook.

The American Chemistry Council (ACC) releases an abbreviated, interim update to its Chemical Industry Situation and Outlook. The update offers two scenarios intended to capture a range of potential trajectories for the global and U.S. economies and the chemical industry.

“ACC typically updates our economic forecast twice a year, but we wanted to provide an interim update that would reflect some of the potential impacts of COVID-19,” says Kevin Swift, ACC chief economist. “While there is significant uncertainty in the projections, short-term risks are to the downside before a possible rebound in 2021.”

According to the update, U.S. chemical volumes are expected to fall 3.3% in 2020 before rising 5.2% in 2021. Basic chemical volumes will drop 2.9% in 2020 before rising 6.7% next year. Chemical shipments are expected to fall 10.0% in 2020 before rebounding by 7.8% in 2021. Anticipated declines reflect struggling end-use markets and export customers for U.S. chemistry products.

Partially offsetting weakness in U.S. chemical production is strengthening demand for chemistry used in the response to COVID-19. Among the many chemistry solutions used in the fight against the virus are synthetic materials for personal protective equipment (PPE), ingredients for cleaners and disinfectants and plastics used in medical equipment such as ventilator machines and IV bags.

Automotive and building and construction are key end-use markets for chemistry. According to ACC projections, vehicle sales will fall sharply to 13.1 million in 2020 before improving to 15.5 million in 2021 – down from 16.9 million in 2019. Housing starts will tumble to 1.08 million before edging to a higher 1.19 million pace in 2021. Specialty chemical volumes will decline 4.4% in 2020 before rebounding 3.3 in 2021.

“Industrial activity started the year on a weak note even before news of COVID-19 emerged in late January,” says Martha Moore, senior director of policy analysis and economics at ACC. “Then supply disruptions from China began to percolate through the U.S. industrial sector. With further shocks to aggregate demand, U.S. industrial production is set to fall 8.4% this year before growing by 2.6% in 2021.”

Global GDP is expected to contract by 2.5% in 2020 before rebounding 6.0% in 2021, according to ACC’s update. As the industrial sector has been dealt a series of blows from closures related to COVID-19, demand destruction and logistical challenges, global industrial production will fall 3.9% in 2020 before improving 5.6% in 2021. Trade and commercial activity have experienced an unprecedented collapse, and world trade is seen shrinking 10.5% in 2020 before improving by 9.9% in 2021.                                        

U.S. GDP is projected to fall by 4.0% in 2020 before rising 4.0% in 2021. Consumer spending will decline by 4.6% in 2020 before rebounding 4.4% next year. Economy-wide business investment was already lower prior to COVID-19 and is expected to decline 9.7% in 2020 before showing 3.0% growth in 2021.

With more than 20 million people filing unemployment claims in the past four weeks, the unemployment rate is expected to reach over 13% by the end of Q2 2020 before steadily easing through 2021. After three years of gains, chemical industry employment is expected to decline by 28,000 (5.1%) in 2020. Chemical industry capital spending declines 2.0% in 2020, but grows 1.8% in 2021.

For more information, visit:

Sponsored Recommendations

Heat Recovery: Turning Air Compressors into an Energy Source

More than just providing plant air, they're also a useful source of heat, energy savings, and sustainable operations.

Controls for Industrial Compressed Air Systems

Master controllers leverage the advantages of each type of compressor control and take air system operations and efficiency to new heights.

Discover Your Savings Potential with the Kaeser Toolbox

Discover your compressed air station savings potential today with our toolbox full of calculators that will help you determine how you can optimize your system!

The Art of Dryer Sizing

Read how to size compressed air dryers with these tips and simple calculations and correction factors from air system specialists.