The Manufacturers Alliance/MAPI has called a bottom.
The economic contraction that has rattled U.S. producers and consumers has flamed out, the trade group reports, and the long cleanup ahead will draw a good deal of its steam from manufacturing’s resurgence.
The Manufacturers Alliance/MAPI Quarterly Economic Forecast, released Wednesday, predicts that U.S. gross domestic product will fall 2.7% this year, and then rise by 2.1% in 2010 and 3.2% in 2011, in what the group calls a “modest and fragile” recovery.
“The forecast for 2010 calls for a slight rebound in overall consumer spending based on slow personal income growth, and we look for continued improvement in the consumer sector in 2011,” said Manufacturers Alliance/MAPI Chief Economist Daniel J. Meckstroth, in a statement.
Buried in an otherwise promising forecast, however, is one prediction that may give onlookers pause. According to MAPI, this year’s unemployment rate of 9.2% will become 9.9% in 2010, with 2011 expected to show only slight improvement, to 9.2%. MAPI’s report and others lend credence to the idea that the United States will experience the “jobless recovery” that some observers fear.
But in a manufacturing sector that has borne the brunt of paltry business and consumer spending, the next couple of years promise welcome relief, according to the quarterly barometer. After an 11.9% decline in manufacturing production this year, MAPI said, 2010 will feature 3.2% growth, ratcheting up to 5.1% in 2011.
“Economic momentum will be enhanced as pent-up demand is unleashed, especially for new housing and motor vehicles,” Meckstroth said, “as both of these industries are rebounding from several years of exceptionally low production.”
Indeed, light vehicle sales will reach 14.3 million units in 2011, after just 10.3 million sold in 2009 and an estimated 11.8 million in 2010. As recently as 2007, that number topped 16 million units.
Computers and electronic products also enjoy high expectations, according to the report. Such products will end 2009 down nearly 11% year over year, but will rebound by nearly 9% in 2010 before surging 15.4% in 2011, MAPI said. By contrast, manufactured products outside the computers, communications, and chips category will trudge toward recovery over the next two years, projected to gain 1.9% in 2010 and 4.8% in 2011, after a nosedive of 11.8% this year.
The industrial equipment and transportation equipment sectors show great promise for recovery through 2011, the report found, even as they endure significant demand swings. Expenditures for industrial equipment, for instance, will decline by 22.7% in 2009, then shrink 0.7% in 2010, only to rebound by 20.5% in 2011. Producers of transportation equipment are in for a wilder ride, experiencing a 42.8% plunge in 2009 that will be followed by a 52.1% surge in 2010 and a gain exceeding 36% in 2011.