We are in an extraordinary time. As an industry economic advisor, I can truly say this has been one of the most difficult times to provide reliable economic information and forecasts. The situation is changing by the day and the hour. Food / Beverage / Travel and Entertainment are off by 90%, States are issuing stay-at-home orders and now we see an increase in states shutting down construction sites. We could not have predicted the onslaught of the Covid-19 virus, nor can we reasonably predict (with any degree of certainty) the near-term outlook.
However, the main thing to remember is that an economic construct begins and ends with people. Over the coming days, weeks and quarters, we will see continued growth in the numbers of infections and, tragically, deaths. Containment efforts will escalate in order to protect not only people but our future. As a result of these containment efforts, we will need to continue to sacrifice short-term economic stability in favor of preservation of life and longer-term positive economic outcomes. Businesses will be lost. Many people have and will be out of work. Bills and mortgages will go unpaid as market and economic uncertainty limit any new investment in people, property, plants and equipment. Government stimulus, while supportive, will not cure all. Plan accordingly.
DISC Corp Baseline Forecasts for Electrical Distribution as of March 31st 2020:
- In general, for most markets the current forecast is to return to pre-pandemic levels by 2023 (equivalent to 2019). The current but changing expectation for the overall Electrical Distribution market is to finish 2020 down -12.4% below 2019 results. We expect further downward revisions as we continue to gather data. As of now, the expectation for 2021 is flat to slightly downward at -0.3%. We are forecasting growth of 7.8% in 2022.
- The Construction sector forecast is down -16.4% year over year for 2020 with the bulk of the downturn falling in the 3rd and 4th quarters of 2020. Construction markets tend to fall behind other markets and could experience near-term smaller declines followed by steeper declines later this year and into the start of 2021. The forecast for 2021 is down -2.4%, and we are forecasting growth in 2022 of 8.6%.
- The Industrial sector current forecast is for year over year to be down -12.2%. The automotive industry is a heavy contributor to this forecast, as plants are closed or idled. The sector will return to modest 1.2% growth 2021, and 7.7% in 2022.
- The Institutional sector forecast is down -6.3% for 2020 with a return to growth of 1.4% in 2021 and 7% in 2022.
- The Utility sector forecast is down -5.8% in 2020, flat in 2021, and a 6.4% increase in 2022.
Current Quarterly Forecasts for 2020
The current COVID-19 pandemic will continue to negatively and unpredictably pressure results through Q1 2021. Expect these forecasts to be revised downward in the weeks ahead. We currently anticipate a measured and slow market rebound beginning Q4 2020 with a return to positive results midyear 2021 and recovery to pre-pandemic market levels in 2023.
Detailed information by sector and key economic indicators is available in the complete DISC Report. Call DISCCORP today at 346.339.7528 to find out how to obtain your copy or use our website’s Contact Us Form.