Economic expansion of U.S. economy may last years

Forecasts now estimate that the U.S. economy could sustain growth into 2015, says the Chemical Activity Barometer (CAB), a monthly report issued by the American Chemistry Council.

In August 2013, the CAB rose 0.4% on a three-month moving average basis, and 3.3% higher than in August 2012. The CAB is at it highest point since June 2008.

Dr. Kevin Swift, chief economist at the American Chemistry Council, said:

“This 0.4 percent jump is a real improvement in growth dynamics from the smaller, yet steady, increases we saw from March through August. The Chemical Activity Barometer is showing a strengthening of some fundamentals, with forecasts remaining positive. Indeed, there is potential for upside surprises in the U.S. economy.”

The U.S. economy made rapid gains early on

The report shows that the U.S. economy made rapid gains early on during the economic recovery, and have given way to a slower, more sustainable rate of growth.

Continued improvements were observed in construction-related coatings, plastic resins, and pigments.

The production of plastic resins, used in institutional and consumer applications, has grown significantly and is forecast to do so at an even faster pace.

The authors wrote “Chemical equities far outpaced the benchmark S&P 500; rising about 1.3 times faster, while downstream inventory, new orders, and production also improved.”

The Chemical Activity Barometer is derived from a composite index of chemical industry activity.

In the history of the U.S. economy, the chemical industry has consistently led the country’s economic business cycles because of its early position in the supply chain.

Economists commonly look at this barometer to determine turning points and probable trends in the wider economy.

Movements that focus on month-to-month activity can be volatile and less reliable for making forecasts, so a 3-month moving average of the barometer is given.

The Chemical Activity Barometer provides a more accurate picture of national economic trends.

The Chemical Activity Barometer (CAB) has been demonstrated to perform better (provides a longer lead) than the National Bureau of Economic Research by 2 to 14 months, with an average lead of eight months at cycle peaks.

The Chemical Activity Barometer was developed by members of the economics department at the American Chemistry Council.