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ACT Research announced this week it has updated its GDP forecast to account for a potential mild recession, but still believes there is enough pent-up demand, and built-up purchasing power among consumers, albeit mitigated by inflation, to support growth in 2022
ACT’s analysts also believe tighter monetary policy will lead to GDP contraction in the first half of 2023, which will be offset by growth in the second half of next year, leading to a flat GDP forecast for the full year.
This analysis was released in the company’s North American Commercial Vehicle Outlook report.
“We continue to see at least three factors mitigating a more severe downturn,” says Kenny Vieth, ACT president and senior analyst. “Carrier profitability is strong, with profits at all-time record levels in 2021, and full-year TL fleet profits are pegged at second-best ever levels in 2022. Vehicle demand remains healthy, if moderating from here, with pent-up demand expected to push into 2023. Finally, some pre-buy activity is anticipated prior to the implementation of CARB’s Clean Truck mandate, helping to support activity next year.”
Looking past this year, Vieth says the modest economic rebound ACT Research is forecasting in the latter half of 2023 “implies a pause in tightening by the Fed by the first half of the year.”
“As the economy laps tough inflation comparisons in early 2023, and with the economy sufficiently slowed by 2022’s justifiably aggressive rate hikes, we believe inflation is likely to come increasingly under control, allowing the Fed to pause and take stock,” he says. “With no additional pressure being applied to the brakes, we envision the economy to resume expanding in the end of 2023.”