The Economy and the Supply Chain in 2019

Published February 27, 2019

I am not an economist, but I think it is important to stay informed as the economy has a huge impact on supply chains.  

First, let’s look back at some of the major events of 2018:

1. The U.S. corporate tax rate was reduced to 21 percent, which was a 14 percent reduction from the previous rate of 35 percent. This was a big deal.
2. Personal tax relief, including lower tax rates and higher standard deductions, was also a big deal.
3. Wages went up 3.1 percent, which was the highest increase in the last decade. Consumer debt and consumer spending were also up in 2018.
4. The U.S. did not experience inflation or deflation, which was also good.
5. The trade war, which I believe was over-stated, has not had a huge impact on corporations.
6. eCommerce, New Retail and the supply chain all remained in good standing. 

Looking forward to 2019:

1. Some predictions are gloom and doom. Some experts believe a huge stock market crash will lead to falling house prices and a long recession. However, I have not seen any facts to back up such statements.
2. Strong earnings will continue this year. In 2018, earnings were up 10.1 percent, as of early 2019, earnings are currently up 7.8 percent. This is still very healthy.
3. The stock market buy/sell rates are at 1.25, which is also very healthy.
4. The U.S. GDP was 3 percent in 2018 and will slow to 2.3 percent this year. But again, still healthy.
5. Unemployment was at 3.7 percent in 2018 and I believe will further decrease in 2019.
6. I think manufacturing output will grow at over 2 percent per year for next several years.
7. Oil and gas prices are stable.
8. The U.S. dollar is strong.

Moving forward in 2019, I see subdued economic growth, but the economy is still looking healthy and strong.

I also believe there is a positive outlook for supply chain in 2019. There are still many challenges, opportunities and threats, but this is what creates supply chain innovation. Innovation is good and begets growth, so my view is one of high optimism. As Franklin D. Roosevelt stated at the center of the Great Depression, “The only thing we have to fear is fear itself.” I am optimistic about the country, business landscape and the supply chain growing and progressing throughout 2019.

More Resources

• Discussion: The Impacts of Tariffs and Trade Tensions on Global Supply Chains
• Article: Predictions from Supply Chain Gurus for 2019
• Video: Creating Competitive Advantage