TPT May 2019

G LOBA L MARKE T P L AC E

joints up to 551 megapascals, making them comparable to steel. Alloy AA 7075 is already used in plane fuselages and wings, generally joined by bolts or rivets, but its resistance to the type of welding used in automotive manufacturing has prevented it from being widely adopted. Xiaochun Li, UCLA’s Raytheon Professor of Manufacturing and the study’s principal investigator, said in The Engineer : “Companies could use the same processes and equipment they already have to incorporate this super-strong aluminium alloy into their manufacturing processes, and their products could be lighter and more energy efficient, while still retaining their strength.” Economists’ eye view of a US recession In late February, Bloomberg looked at a survey of US economists’ views on a possible US recession [“Most economists see US recession by 2021, survey shows”]. It reported that over 75 per cent of business economists expect the US to enter a recession by the end of 2021, though a majority still estimate the Federal Reserve will continue raising interest rates during 2019. According to a semi-annual survey by the National Association for Business Economics (NABE), 10 per cent foresee a recession beginning in 2019, with 42 per cent projecting 2020.

NABE members were divided on the impact of the Fed’s balance sheet normalisation process. Asked about the effect of the tightening on short-term funding rates, a fifth said they saw no impact, another fifth said it would raise rates by 25 basis points, and a fifth expects rates to rise 50 basis points or more. “There is a schism between what the NABE panel and the markets think about the Fed’s rate path and the shrinking of its balance sheet,” said Megan Greene, chief economist at Manulife Asset Management and chair of the survey. “Markets are pricing in no more interest-rate hikes in 2019, whereas a majority of the NABE panel expects one or two rate hikes.” While 23 per cent expected the Fed to raise the main interest rate to 3 per cent before beginning to make any cuts, 11 per cent expect the next rate move to be an easing. President Donald Trump’s trade policies continue to be cited as cause for concern. If existing tariffs remain in place, 36 per cent of respondents expect 2019 gross domestic product growth to reduce by 25 basis points, while 41 per cent anticipate a drop of 50 basis points or even more. And on the question of inflation, economists largely anticipate that tariffs will boost inflation, with only 6 per cent seeing them make no impact whatsoever. Gill Watson Features Editor (Europe)

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MAY 2019