Interest rate hikes persist, optimism about inflation under control fades

According to the latest study by ACT Research Industry Status: NA Grades 5-8 report, persistent inflation, continued interest rate hikes and the potential for recession remain overarching themes. While the themes remain the same as last month, the biggest change is ACT’s waning optimism that inflation can be easily brought under control.

“On the bright side, supply chain disruptions continue to moderate. A modest 2023 recession centered around Q1’23 remains our base-case scenario, with a deeper freight slowdown having already begun in Q2’22 and beginning to contract year-on-year in Q4’22,” said Eric Crawford, vice president and principal analyst, LOI. “With underlying inflation defying expectations, we take the Fed at its chairman’s word that the institution will take ‘strong and swift action to moderate demand.’ The consensus expects the Fed to add 75 additional basis points of rate tightening this week. Regarding order activity in August, he commented: “New order activity remained at modest levels in August, albeit above recent levels of activity as OEMs slowly begin to open their 2023 order books May-July is the weakest time of the year for new order activity; generally extends until September.

Stephen V. Lee