b'YOUR TOOLKIT FOR BUILDING EXCELLENCEMacroeconomic OutlookIndustry Snapshots The majority of leading indicators that we trackincluding the ITR May 2023 Leading Indicator, the US ISM PMI (Purchasing Managers Index), Published by ITR Economics Arrow denotes 12-month moving total/average direction. and the US Total Industry Capacity Utilization Ratesignal that Macroeconomic Outlookmany sectors of the US economy will continue to trend on the State-by-State: Permits The majority of leading indicators that we trackincluding th trial Industry Snapshots back side of the business cycle. These sectors include US Induse ITR Leading Indicator, the US ISM PMI (Purchasing Managers Index), (B2B) Production, US Total Retail Sales, and US business-to-businessand the US Total Industry Capacity Utilization Ratesignal th ury Arrow denotes 12-month moving total/average direction. spending. Our analysis of the inverted 10-year to 3-month Treasat RETAIL SALESmany sectors of the US economy will continue to trend on the yield curve, which reaches further out, suggests that these sectors back side of the business cycle. These sectors include US Induswill reach cyclical lows around late 2024. The magnitude of thetrial Production, US Total Retail Sales, and US business-to-business cyclical downturn will differ by sector, but it will be generall(B2B) y mild spending. Our analysis of the inverted 10-year to 3-month Treasury RETAIWL HSOALLEESSALE TRADE relative to historical trends.yield curve, which reaches further out, suggests that these sectors will reach cyclical lows around late 2024. The magnitude of the ering Rising interest rates, alongside economic uncertainty, are hind cyclical downturn will differ by sector, but it will be generallsome firms capex investments. This will contribute to ongoing y mild WHOLAEUSTAOL PE RTORADDUECTION relative to historical trends.slowing growth and eventual contraction in B2B spending. We expect annual US Nondefense Capital Goods New Orders (excluding Rising interest rates, alongside economic uncertainty, are hind hen aircraft), a measure of B2B spending, to peak in mid-2023 and tering some firms capex investments. This will contribute to ongoing declineapproximately 5% altogetherthrough the end of 2024.US Housing Permits in the 12 months through March were 11.5% below the year-ago level.MANUDFACCTTIUORNINGAUTO PRO U slowing growth and eventual contraction in B2B spending. WeAnnual Permits are above year-ago levels for eight states and Washington, DC. Most of these relative winners are in the Great Plainsexpect annual US Nondefense Capital Goods New Orders (excludingAnnual US Total Manufacturing Production, which accounts for(Wyoming, North Dakota, and South Dakota) or the Southeast (Kentucky, Alabama, and Georgia).aircraft), a measure of B2B spending, to peak in mid-2023 and t almost 80% of US Industrial Production, has edged downward hen Half of the states are seeing annual Permits decline at double-digit rates. While these states are spread out across the country, there isdeclineapproximately 5% altogetherthrough the end of 2024a greater frequency of double-digit rates of decline in the West and Mid-Atlantic regions and a lesser frequency in the South and Central .e MANUFACTURING in two of the last three months, and we expect decline to be thROTARY RIGregions. overarching trend into the latter half of 2024. By contrast, overallWe expect the housing construction market, as measured by annual US Housing Starts, to reach a low point around the end of this year,Annual US Total Manufacturing Production, which accounts for is Industrial Production, which is benefiting from mining activity,with recovery slated for 2024. almost 80% of US Industrial Production, has edged downward hovering around record-high levels. Annual Industrial Production Readers Forum in two of the last three months, and we expect decline to be thROTACRAYP RIITGAL GOODS will peak in the latter half of this year and then declineabe out overarching trend into the latter half of 2024. By contrast, ov2.7% in allinto the end of 2024. Industrial sector decline werall ill be What is going on with the debt ceiling, and what are the economic implications?Sara Aybar, Economist at ITR Economics, answers: cushioned by elevated backlogs and near-term reshoring trends. is Industrial Production, which is benefiting from mining activity,hovering around record-high levels. Annual Industrial Production The debt limit is the amount that the US Treasury can borrow to pay the bills that are already due based on prior policy decisions made by REOSIDDSENTIAL CONSTRUCTION will peak in the latter half of this year and then declineab of CAPITNAOLN GO We expect annual US Total Retail Sales to peak around the end out both political parties. While lifting the debt ceiling neither authorizes nor limits future spending per se, the relative gravity of a potential default is a natural bargaining chip for politicians. Congress has increased the debt ceiling on 78 occasions since 1960. Republicans in Congress, whoill beof 2024. 2.7% in allinto the end of 2024. Industrial sector decline wthis year, then decline, about 1% or less, into the latter halfcurrently control the House of Representatives, are asking for spending cuts in exchange for raising the debt ceiling. In turn, the Democrat-cushioned by elevated backlogs and near-term reshoring trends.Consumer financials are stable, with credit delinquencies below the controlled White House and Senate are requesting closures of tax loopholes. As of this writing, a compromise has not been reached. RESIDENTTIIAALLCCOONNSSTTRRUUCCTTIIOONN 2019 level and US Real Personal Income (excluding current transfer NONRESIDENIf the politicians are unable to come to agreement, the US will default on the national debt, and economic uncertainty will rise. It is possible thatofe We expect annual US Total Retail Sales to peak around the end receipts) at record highs. However, savings are not keeping pacthe Federal Reserve could monetize the debt to avoid default, potentially buying Congress some time, but the economy would eventually pay the this year, then decline, about 1% or less, into the latter halfwith inflation; we are monitoring this downside risk to the outl of 2024. ook.price. Consequences of a default could include continued rise in interest rates, tax increases, and spending cuts. Overall, a default would raise Consumer financials are stable, with credit delinquencies below the Rising interest rates, alongside economic uncertainty, are the risk of a deeper or longer-lasting economic recession than the 202324 downturn we are currently forecasting. 2019 level and US Real Personal Income (excluding current transfer RESIDENTIAL CONSTRUCTION hindering some firms capex investments.Please send questions to: questions@itreconomics.comreceipts) at record highs. However, savings are not keeping pace 2030s Great Depression Update With Brian and Alan Beaulieu Coming Soon!SteepMild Rise Flat MildSteepwith inflation; we are monitoring this downside risk to the outlook.Rise Decline Decline Our outlook for relatively mild macroeconomic, industrial, and Rising interest rates, alongside economic uncertainty, are ITR Economics CEO Brian Beaulieu and President Alan Beaulieu have been forecasting an upcoming retail sales downturns in 2024 assumes that the inversion of the Great Depression for the 2030s since the release of their book, Prosperity in the Age of Decline, back hindering some firms capex investments. y yield curve will not extend beyond this year. Recent comments bin 2014. As part of our continued coverage of this significant event, Brian and Alan Beaulieu will be SteepMild Rise Flat MildSteepFederal Reserve Chair Jerome Powell suggest that the Fed could providing an update to their 2030s Great Depression outlook with the latest data and insights.Rise Decline Decline Our outlook for relatively mild macroeconomic, industrial, and maintain a hawkish stance for longer than originally expected, Mark your calendars for Thursday, July 27, at 2:30 P.M. ET for a special 90-minute Virtual Keynote event retail sales downturns in 2024 assumes that the inversion of th d which could jeopardize that assumption. If so, the economy woule live from ITR Economics Studio A. During their 2030s Great Depression Update webinar, Brian and Alan will answer the biggest questions surrounding the upcoming Great Depression and help make sureyr-yield curve will not extend beyond this year. Recent comments bface higher hurdles, which could result in more severe or longeyou and your business are prepared for the decade to come. Federal Reserve Chair Jerome Powell suggest that the Fed could lasting downturns than we are currently forecasting. We are maintain a hawkish stance for longer than originally expected,o our closely monitoring the Feds actions and the potential risks tInsider members will be receiving an exclusive discount code for this summer presentation. which could jeopardize that assumption. If so, the economy would forecasts.Dont miss out on these essential insights!face higher hurdles, which could result in more severe or longer-REGISTER HERE lasting downturns than we are currently forecasting. We are closely monitoring the Feds actions and the potential risks to our forecasts.ITReconomics.com 2023 All Rights Reserved 5ITReconomics.com 2023 All Rights ReservedITReconomics.com ME BUILDER - MAY2023 / 37FRA 2023 All Rights Reserved'