Each new year brings about a sense of optimism. A fresh start. Everyone, it seems, makes resolutions to break old habits and begin anew.
So let's make this clear from the outset: We hope this is the best year yet for the tire and automotive service industry.
And by some industry measures, it appears as if demand for tires and service continues to trend upward, as COVID-related difficulties fade.
Even as Russia's war in Ukraine continues, the supply chain is measurably better than a year ago. In fact, one importer told us late last year that some carriers have dropped freight costs to or below what they were pre-pandemic.
That would have been difficult to believe just nine months ago.
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Inflation seems to have slowed; the unemployment rate ticked down in December; and gas prices have leveled off.
And tire manufacturers continue to invest, as evidenced by Nokian Tyres' plan to add capacity, jobs and a 850,000 sq.-ft. warehouse to its North American plant in Dayton, Tenn.
Collectively, all the new plants either opening or set to open around the world represent new annual production capacity of 16 million passenger/light truck tires, 3.5 million medium truck tires and more than 17,000 metric tons of off-highway tires.
The new plants commissioned in the past year represent more than $3 billion in investment.
All good stuff.
There are signs, however, that things could worsen.
In early January, the World Bank slashed its 2023 global economy growth outlook to 1.7% for 2023, down from its earlier projection of 3%.
The World Bank called it "the third weakest pace of growth in nearly three decades, overshadowed only by the global recessions caused by the pandemic and the global financial crisis."
It also downgraded growth for the U.S. economy — it now forecasts 0.5% growth, nearly 2 percentage points lower than its earlier projection of 2.4%.
In addition, the World bank also cut the projected growth outlook for 2023 in other countries and regions: China to 4.3% from 5.2%; Japan to 1% from 1.3%; and Europe and Central Asia to 0.1% from 1.5%.
Closer to home, news came out the first week of January that more Americans are relying on credit cards to make ends meet, and fewer are able to pay off credit card debt in full each month. Some 46% of Americans now carry credit card debt month to month, up 7 percentage points from 2021.
The Federal Reserve Bank said credit card balances jumped 15% in the last year, the largest increase in more than two decades.
This comes on the heels of news in late December that credit card rates are an average of 19.6%, an all-time high, and that is projected to grow larger as the Fed eyes more interest rate hikes later this year.
So what will 2023 look like?
While some economic factors portend otherwise, let's put our rose-colored glasses on and hope for the best.
Happy New Year.
