AKRON (Jan. 5, 2015) — The economic headlines look better this year than they have in a long time, which bodes well for the tire industry in 2015.
Unlike last January, when the headline in Tire Business read, “…Analysts expect economy to limp along at a lethargic pace,” this year's reads: “Happy days here again? Economy's not quite robust—but it's growing after several sluggish years.” (See story in print edition.)
Since the Great Recession of 2008, the U.S. economy has been limping slowly toward recovery, but this year the U.S. economic forecast looks surprisingly — and consistently — upbeat for perhaps the first time since the so-called “Great Recession” ended.
Economists are calling for 3-percent growth in the gross domestic product (GDP) for 2015, after improving by an average of about 2.3 percent over the last five years. There has been strong job growth, a decline in unemployment, lower gasoline prices, a rebound in new car sales, an increase in freight shipments and an uptick in the housing market.
As we head into a new year, the U.S. is one of the few places in the world where the economic future is looking bright.
For tire dealers, this is a good time to take stock in how to operate in this stronger business environment, es¬pecially since it's been a while since this has been the case.
Some analysts believe that the improved economic indicators are likely to lead the Federal Reserve to finally start raising interest rates, which could happen as early as mid-year.
If dealers are looking to make capital improvements in their operations, now might be a good time to lock in and move forward while interest rates remain low.
Consumer confidence also is rising, buoyed in part by the lowest gasoline prices in years — thanks to increases of domestic oil production in the last few years, spurred by hydraulic fracturing and shale oil exploration. This trend has put more money in consumers' wallets, in a sense, giving everyone who owns and operates a vehicle a bump in expendable income.
With money tight the past few years, many vehicle owners delayed maintenance and other service work on their cars and trucks. Now with more cash in their pockets, they may be inclined to have this work done.
Dealers should look for ways to reach these customers to encourage them to have this much-needed work performed — and even suggest ways they can spruce up their ride with new wheels and accessories.
There is, however, the nagging downside: Miles driven continues to decline, which lessens demand for dealers' products and services, and there's a projected flattening in selling prices for tires and auto service.
Still, for the first time in a long time, the overall picture for the economy is bright — a thankful improvement over the past few years and a great way to start the New Year.
This editorial appears in the Jan. 5 print edition of Tire Business. Have an opinion or comment about it? Email us at [email protected]. You also can send a letter to the editor to that email address.