MHI Forecast
Mixed Economic Outlook for 2025 Amidst Ongoing Geopolitical Risk
By John Paxton, CEO, MHI
THE ECONOMIC FORECAST for 2025 presents a mixture of both favorable and risky indicators. On a positive note, the prediction is for a continued decrease in inflation as interest rates decline. Additionally, a strong labor market and healthy GDP growth are expected to continue.
Despite lingering worries about economic sustainability and interest rate policies, the foundation of the U.S. economy remains robust. Current data suggests that inflation is on the decline and the possibility of a recession is diminishing.
However, the potential geopolitical conflicts, changes in trade policies and overall uncertainty following the 2024 U.S. elections could stoke inflation. Moreover, inflationary risks may increase if crucial global shipping routes and oil production are threatened by ongoing conflicts.
Job Market Supports Growth
Anticipated modest job growth in 2025 is expected to drive competition for labor in various sectors, resulting in rising wages and high levels of labor demand. For material handling businesses, escalating labor costs could pose a threat to profit margins.
Reshoring presents an additional benefit for the material handling industry. With escalating tensions between the U.S. and China, many American companies are opting to move their manufacturing operations closer to home. This shift has made Mexico the largest trade partner of the U.S., prompting increased investments in the region by material handling and supply chain companies.
Supply Chain and Material Handling Opportunities
Despite the risks associated with uncertainty and geopolitical tensions, Jason Schenker, president of Prestige Economics and our MHI partner, identifies three key trends that present opportunities for material handling businesses and manufacturers to capitalize on in the year ahead:
Automation
Businesses are increasingly turning to automation and robotics to enhance operational efficiency and scale, due to labor shortages. Automated warehouses and AI-driven inventory systems can mitigate workforce shortages and boost efficiency, productivity and profitability.
Data-Centric Technology
The utilization of big data for predictive analytics, machine learning and AI is an emerging trend that can offer greater transparency and efficiency in supply chains. By enabling real-time tracking and improved forecasting, companies can become more agile and resilient.
Reshoring and Nearshoring
With the rising risks of supply chain disruptions and geopolitical tensions, many companies are considering bringing their manufacturing operations closer to home. This move can lower transportation costs, enhance supply chain resilience, boost local economies and create domestic or North American jobs.
The economic landscape for the upcoming year offers promising opportunities alongside ongoing risks. Risk monitoring and scenario planning coupled with a proactive approach to innovation and growth will be crucial in navigating the evolving and uncertain environment in 2025.
To discover cutting-edge equipment and technologies propelling the supply chain forward, visit ProMat in 2025, held on March 17-20 at Chicago’s McCormick Place. You can choose from over 200 no- cost education sessions, hear dynamic keynotes (including the release of the 2025 MHI Annual Industry Report) and visit more than 1,100 exhibitors showcasing the latest innovations. For more information or to register, please visit promatshow.com.
