Issue link: http://palletcentral.uberflip.com/i/739842
the author) who expected growth to rebound much faster based on historic experience. Industrial production of manufactured goods, the key driver for the pallet industry, was expected to experience above trend growth as well. In 2010-12 growth did move up to 3% and seemed to support that view. But all that changed after 2013. Growth slowed to 1%. Since early 2015, there has been no growth at all in the industrial production index. Growth in Europe has also been extremely low. Policymakers in Europe are also trying to avoid deflation. China appeared to be the one bright spot. But that has proved to be an illusion. Their growth was sustained by a massive build up in bank loans to fuel an investment and a residential boom. Growth Likely to Remain Sluggish The growth rate in the overall economy or industrial production is not likely to improve much over the next few years. The key driver for overall growth, the consumer, remains very positive. Consumer spending, which comprises 70% of the economy, has been growing near 3%, but the overall economy (as measured by Gross Domestic Product-GDP) is up only 1.2%. The underlying drivers for consumer spending (confidence, employment growth and net worth) point to sustained growth in consumer spending through 2017. Housing starts continue a painfully slow recovery as well. Residential expenditures in the GDP accounts are up only 6%. The recent growth in household formations and the increases in home prices and rent for apartments will drive housing starts higher for at least another few years. Housing Star ts Unfortunately, two major components of GDP are holding back growth. First, net exports continue to decline. The main factors pushing net exports down have been slow economic growth in the global economy plus the strength of the U.S. dollar. The strength of the U.S. dollar is driven by the relatively attractive returns in the U.S. financial markets and expectations of higher interest rates. This is not likely to change in the next year. palletcentral.com PalletCentral • September-October 2016 19 The growth rate in the overall economy or industrial production is not likely to improve much over the next few years.