b'THE OFFICIAL NFBA MAGAZINEJuly 2023 Published Monthly by ITR EconomicsMacroeconomic OutlookIndustry Snapshots The US economy, measured by US Real Gross Domestic Product (GDP), has been on the back side of the business cycle since Arrow denotes 12-month moving total/average direction. the second half of 2021. Many markets across the economy are slowing in growth or declining. The industrial sector, business-to-business spending, and US Total Retail Sales are either at or near record highs but are slowing in their pace of rise. Macroeconomic RETAIL SALES fundamentals, including the sustained inversion of the Treasury ECONOMIC UPDATEyield curve, elevated interest rates, and consumer and business financials, signal that these sectors of the economy will decline, to varying degrees, in 2024.WHOLESALE TRADEThe nonresidential construction sector typically lags the overall macroeconomy, as it takes time for needs to be determined, funding to be allocated, and projects to be planned and started. AUTO PRODUCTION Therefore, nonresidential construction is still rising at an accelerating rate. This trend will not last indefinitely, and mild decline is expected to begin in the latter half of 2024.MANUFACTURING Slowing growth in the US macroeconomy is easing the pressure on supply chains. In May, the Global Supply Chain Pressure Index reached its lowest level in over 14 years17 months after ROTARY RIG its December 2021 record high. While this does not mean that all supply chain challenges are resolved, generally improving conditions will allow businesses to meet customer demand more effectively. CAPITAL GOODS The industrial sector, business-to-business spending, and US Total Retail Sales are either at or near record highs but are NONRESIDENTIAL CONSTRUCTION slowing in their pace of rise.Pricing will be impacted by the loosening supply chain. To account for this, as well as actions by the Federal Reserve and sharp decline RESIDENTIAL CONSTRUCTION in some commodity prices, we revised our expectations for US Producer Prices. Expect deflation in Producer Prices during much of 2024. However, do not expect Producer Prices to return to pre-pandemic levels during this period. Despite the overall easing in Producer Prices, labor costs are likely to face upside pressure from the tight labor market.SteepMild Rise Flat MildSteep Rise Decline Decline Make sure you are monitoring your own input costs as supply chain constraints continue to ease and macroeconomic growth wanes. Before locking in long-term pricing contracts, make sure that your input prices are really at the bottom of the cycle. Pricing trends will vary by market. For example, markets for luxury goods and specialized materials, which tend to have a higher degree of industry consolidation than others, may be more insulated from this decline. In general, however, pricing pressures will be less of a contributor to your top-line growth in 2024. Focus on communicating your competitive advantages to clients to help maximize your margins during this time. ITReconomics.com 2023 All Rights Reserved 130 / FRAME BUILDER - AUG2023'