Q-and-A: ACC's Kevin Swift on the council's Chemical Activity Barometer - SmartBrief

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Q-and-A: ACC’s Kevin Swift on the council’s Chemical Activity Barometer

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Source: American Chemistry Council

Kevin Swift is the chief economist and managing director at the American Chemistry Council in Washington, D.C., where he is responsible for economic and other analyses dealing with markets, energy, trade, tax and innovation, as well as monitoring business conditions and identifying emerging trends for the domestic and global chemical sectors. He is an authority on the global chemical industry, and his research and analyses aid decision making throughout the industry. I recently asked him about the council’s new Chemical Activity Barometer.

What are the goals of the Chemical Activity Barometer? What is ACC hoping to achieve for itself, the industry and for broader economic analysis?

The Chemical Activity Barometer is meant to help identify trends in the broader U.S. economy as well as specific sectors outside of, but closely linked to, the business of chemistry. We want to use this tool to provide earlier economic forecasting, determine likely future trends of the entire U.S. economy, and highlight the chemical industry’s role as a leading economic driver, helping media, consumers and policymakers to better understand the essential link between the business of chemistry and overall economic health.

Why launch now? Was there an incentive to launch last month rather than waiting, say, till beginning of 2013?

Given the current state of flux in the U.S. economy, we wanted to ensure the data was available to others as quickly and efficiently as possible, allowing individuals and organizations to forecast trends in their sales and economic growth much sooner than, say, 2013.

What makes the CAB and American chemistry such a great leading indicator for industrial production and other economic trends?

The CAB is an index based on chemical industry data, which leads overall industrial production and the overall business cycle. Because our chemicals are an essential part of every facet of our nation’s economy, and in fact, over 96% of all manufactured goods are directly touched by the business of chemistry, our industry is in a unique position to forecast the economic health of the overall U.S. economy. Our early position in the supply chain gives us a unique ability to evaluate the direction of the U.S. economy, providing a long lead time to the business cycle turns identified by the National Bureau of Economic Research by anywhere from two to 14 months. We also have the ability to identify emerging trends in specific sectors, closely linked to the chemical industry, such as housing and automotive.

How do you envision the CAB helping a decision-maker in the chemical industry?

The CAB is an indicator of overall U.S. economic health, not just the chemical industry, so its usefulness and value extend far beyond just the chemical industry to anyone who is making decisions based on the economic health of the U.S. economy and the manufacturing sector.  Decision makers need information and they need it early. Time is money. That’s what sets this composite index apart from so many others. As a supplier to so many other industries, the business of chemistry is very early in the supply chain. This barometer leads business cycle peaks by an average of eight months and the troughs by an average of three months. To decision-makers, time is money.