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‘R’-word creeps into CV outlook

June 13, 2022
The probability of a mild recession—with an emphasis on “mild”—is now “nearly as likely” as that of ACT Research’s base-case scenario, according to the market analysts

While ACT Research suggests that a “soft landing” is the U.S. economy’s “most likely path,” the potential for a mild recession is becoming an “increasingly compelling” alternative. The update comes via ACT’s latest release of the North American Commercial Vehicle OUTLOOK.

“We find ourselves in a turbulent environment, where still significant positive and increasingly negative economic forces are crashing into one another,” ACT President and Senior Analyst Kenny Vieth said. “With inflationary shocks emanating from Ukraine, the Fed’s task of engineering a soft landing has become increasingly challenging.”

Indeed, the probability of a mild recession—with an emphasis on “mild”—is now “nearly as likely” as that of ACT’s base-case scenario, Vieth noted.

“With the current head of steam that includes healthy consumer and business balance sheets, strong employment demand, and pent-up manufacturing sector activity, this inflation driven economic slowdown is on one hand somewhat unique,” he said. “On the other, traditional recession predictors are in play: Fed rate hikes, high energy prices, negative exogenous events and falling equity valuations come to mind.

“We believe the odds of a recession materializing, in some form or fashion, are essentially 50/50 relative to our slowing topline growth into a modest freight recession base case.”

The N.A. CV OUTLOOK report forecasts the next 1-5 years, with the objective of giving OEMs, Tier 1 and Tier 2 suppliers, and investment firms the information needed to plan accordingly for what is to come. The report provides a complete overview of the North American markets, as well as takes a deep dive into relevant, current market activity to highlight orders, production, and backlogs, shedding light on the forecast.