Strauss: We're Skirting a Recession - Collision Repair Magazine

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Strauss: We're Skirting a Recession

Thursday, 29 May 2008

CHICAGO, IL -- May 29,2008 -- At the start of this year’s Global Automotive Aftermarket Symposium (GAAS), 60 per cent of attendees polled said they believed the economy is in the early stages of a recession.

William A. Strauss, senior economist and economic advisor in the economic research department of the Federal Reserve Bank of Chicago, says a recession hasn’t yet hit because of employment, manufacturing and other rates.

Strauss describes recessions as being based on monthly indicators, not two back-to-back quarters of negative growth. Since the U.S. has been looking at whether the country is in a recession, Strauss says we have experienced multiple quarters of negative growth, just not consecutive.

If it’s not a good year for the consumer, it could translate into a inferior year for the aftermarket.

For the automotive sector, Strauss is not optimistic mainly due to the rise of gas prices.

Strauss highlighted vehicle sales as having sustained significant losses. Since 1999, only 16 million units have been sold each year, flattening out growth in the sector.

But manufacturing thus far is not slipping – just flat.

“If we are in a recession, manufacturing is a sector that usually falls early and falls hard,” Strauss says.

Capacity is still at a solid position. Production, which Strauss said was slowing the pervious year, has improved.

“In the end, the gross domestic product (GDP) outlook should improve in the second half, probably not to the average 2.5 percent level, but closer to 2 percent, while employment will continue to struggle. We’re probably skirting a recession at this point, but I personally don’t believe we’re in a recession,” Strauss says.

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