Long-awaited growth is finally poised to return to the U.S. economy, albeit at a far more modest rate than the typical recovery from previous recessions, according to a new report.
The Manufacturers Alliance/MAPI Quarterly Economic Forecast predicts that inflation-adjusted gross domestic product (GDP) will decline 2.5 percent in 2009, before rebounding to 2.4 percent growth in 2010, and by 3.5 percent in 2011. The GDP forecast for all three years in the current MAPI report is marginally better than was previously projected in August 2009. By supplying major assumptions for the economy and running simulations through the IHS Global Insight Macroeconomic Model, the Alliance generates unique macroeconomic and industry forecasts.
“We are pleased there is growth in the overall economy, and surprisingly strong growth in manufacturing,” said Daniel J. Meckstroth, Manufacturers Alliance/MAPI Chief Economist. “Yet by historical standards it is still modest compared to recoveries from past recessions.
“Manufacturing production growth, at 4.6 percent, will grow faster than the general economy, at 2.4 percent, in 2010,” he added. “An inventory swing in the goods producing sector is a major reason for the acceleration in manufacturing production. We expect manufacturing growth to be led by high technology products, semiconductors, and computers.”
Manufacturing production growth is expected to decline 11.3 percent this year before rebounding to 4.6 percent growth in 2010 and to 6.0 percent growth in 2011.
Production in non-high-tech industries is expected to decline by 11.3 percent in 2009 before increasing by 2.3 percent in 2010 and by 5.8 percent in 2011. The computers and electronics products sector will also see a drop-off this year, declining by 9.4 percent. High-tech manufacturing production, however, is expected to improve markedly, to 15.9 percent growth in 2010 and by a healthy 17.5 percent growth in 2011.
The expenditure category for inflation-adjusted investment in equipment and software is likely to decrease by 17.2 percent in 2009, before experiencing 9.1 percent growth in 2010 and 15.2 percent growth in 2011. Capital equipment spending in high-tech sectors will continue the trend. Inflation-adjusted expenditures for information processing equipment are expected to fall 6.5 percent in 2009 before rising by 6.9 percent in 2010 and by 7.8 percent in 2011.
The forecast expects industrial equipment expenditures to decline by a severe 22.7 percent this year. The spending will recover, however. MAPI predicts 3.5 percent growth in 2010 and a significantly improved 22.6 percent growth in 2011. The outlook for spending on transportation equipment is for excessively wide swings in either direction. The analysis projects a 49.6 percent decline in 2009, followed by a 55.2 percent increase in 2010 and a 46.7 percent advance in 2011.
Spending on non-residential structures is expected to retrench over the next two years, declining by 18.3 percent in 2009, and by an additional 16 percent in 2010 before seeing growth of 1.1 percent in 2011.
Exports and imports will both experience a substantial downturn in 2009 before recovering. Inflation-adjusted exports are anticipated to decrease by 10.8 percent in 2009 before rebounding to 7.6 percent growth in 2010 and to 9.5 percent growth in 2011. Imports are expected to decline by 14.5 percent this year, to increase by 8.3 percent in 2010, and to further increase by 6.3 percent in 2011. The employment outlook, unfortunately, will continue to pose a challenge. MAPI forecasts unemployment to average 9.2 percent in 2009, 10 percent in 2010, and 9.1 percent in 2011.
The price per barrel of imported crude oil is expected to average $59.10 in 2009 before heading upward to $69.80 per barrel in 2010 and to $73.50 per barrel in 2011. While high by historical standards, this still compares favorably to the average $92.30 price per barrel in 2008.
Included in MAPI’s November 2009 economic outlook is the annual long-term forecast. Average annual GDP growth from 2010-2014 is expected to be 3.1 percent, including a peak growth annual high of 4 percent in 2012.