In 2015, the global manufacturing industry, which represents the major customer base of the US chemical industry, continued to cope with the market weakness that began in 2014. However, American chemical companies have gained a competitive advantage because of shale gas. Therefore, the output of the US chemical industry increased by 3.6% last year, far better than the decline in 2014. The prospects for this year and beyond are bright.

In the United States, economic growth is still below its potential due to high taxes, debt, and regulatory burdens that still damage business and consumer confidence. In 2015, companies were cautious and their capital expenditures were slow. In addition, weak overseas and a higher dollar have also inhibited US exports. Nevertheless, further improvement in the employment situation, lower oil prices to bring more discretionary income, and higher asset prices have prompted consumers to resume consumption.

The US economy should grow moderately this year. We can predict this by examining the trends in the Chemical Activity Barometer (CAB) of the American Chemistry Council (ACC). CAB is a comprehensive index that tracks economic indicators of chemical industry activities. (CAB appears in CP’s economic snapshot every month) Because of its early position in the supply chain, the activities of the chemical industry lead the activities of the entire economy. Therefore, CAB can point to a potential turning point in the entire economy. CAB currently shows slow economic growth in 2016. The consensus forecast this year is that the US gross domestic product (GDP) will grow by 2.6%, slightly above the trend. This trend will slow down slightly in 2018 and beyond. As of December last year, the current recovery and expansion have lasted 78 months; the average time for the economy to improve after World War II is 60 months. So, the current improvement is a bit outdated. To use the baseball metaphor, we are in the seventh game. Due to demographics, policies and other factors, the long-term growth of the US economy will slow down.
Manufacturing output improved in 2014, but activity stagnated last year-this marked the first year of this round of recovery and expansion, with industrial growth lagging behind the overall economy. This reflects a higher US dollar, weak growth in emerging markets, rising uncertainty, declining business investment income, and declining oil production. US light-duty vehicle sales have indeed risen and will rise further in 2016, as pent-up demand, improved employment (and income) prospects, and better credit supply have contributed to growth. In short, 2015 and 2016 will be the best year for automakers since 2000; sales should increase further in the next few years. However, the outlook for the housing market, another major consumer of chemical products, is still cautious (starting at approximately US$15,000). Low interest rates and better employment growth will ultimately lead to an improvement in the family structure, which is the main long-term driver of real estate. In 2016 and 2017, the number of new housing starts should increase. The activity will still be well below the peak of 2.07 million vehicles in 2005, but by the second half of this decade, the activity will be close to the long-term potential demand of 1.5 million vehicles per year as shown by demographics and replacement demand. Table 1 summarizes the macroeconomic outlook.

Industry performance
As mentioned earlier, the output of the US chemical industry increased by 3.6% in 2015. Despite the drop in oil prices, the US chemical industry is still in a favorable competitive position in terms of raw material costs due to the drop in natural gas prices. This will support the development of the US chemical industry's production.

The weakness of the US manufacturing industry has curbed domestic chemical demand, and weakness in other regions has also hindered export sales, although favorable oil and gas price ratios usually help chemical exports. Nevertheless, the performance of US plastic resin exporters in 2015 was very good. ACC expects that with the improvement of global production activities and the increase in the production capacity of organic chemicals, plastic resins and other downstream products in the United States, chemical trade will continue to expand. However, imports of pharmaceuticals and agrochemicals will still stimulate the trade deficit, and large (and growing) surpluses in basic and specialty chemicals will partially offset the trade deficit.