A new year, a new set of challenges. The economy is showing signs of life, and that's a good thing all around, but this year will be uneasy as wars continue in Ukraine and Israel and the presidential election draws closer.
While U.S. inflation grew in December to 3.4% from 3.1% in November, it was down from 6.4% in December 2022 and 9.1% in June 2022.
The Federal Reserve said the yearly decrease has boosted consumer spending, and the government maintains hopes for a "soft landing" from rate increases.
In the past, raising interest rates to combat inflation often leads to a recession. A "soft landing" is when the economy adjusts without a recession.
On Jan. 4, U.S. Treasury Secretary Janet Yellen said the U.S. economy is already in a soft landing.
The combination of more spending and continued uncertainty could mean a great year for the tire industry: Consumers have seen inflation cut in half in a year and are willing to spend. Recession fears have many people holding on to their vehicles longer (average vehicle age has increased to 12.5 years).
Conflict continues in Israel and Ukraine, and Houthi pirates are attacking ships in the Red Sea. The war in Ukraine has moved a number of tire companies to withdraw from Russia. Late last year, Bridgestone finalized its exit from Russia, where it had manufactured tires since 1998. Since the Russian invasion started, Continental A.G., Group Michelin and Nokian Tyres P.L.C. also have sold their operations in Russia.
The elephant in the room — and the donkey — this year is the election. There is certainly a sense that this election cycle could go many ways, but mild and quiet will not be one of them. Who knows what impact "the circus" will have on our everyday lives or the tire industry. But it'll have some impact.
Roy Littlefield IV, head of government affairs at the Tire Industry Association, told us in December that one effect of the election season could be a slowdown of legislation. Political posturing in an election season slows the wheels of democracy to a grind, and legislation — like the Right to Repair bill currently being considered in the House — may not be addressed.
In most automotive service shops, 2024 is going to be a lot of the same. Shop owners and managers are going to continue to have trouble finding and keeping good technicians, consumers are going to continue to need their vehicles serviced, and Larry is probably still going to steal your lunch out of the fridge.
Take it in stride, because this year should at least be interesting.