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MAPI Report: Economy Showing Signs For 2010 Recovery
May 17, 2009
Inflation-adjusted gross domestic product, which grew by a miniscule 1.1% in 2008, will decline 2.9% in 2009 before rebounding to 1.9% growth in 2010, according to the latest Manufacturers Alliance/MAPI Quarterly Economic Forecast.
The GDP forecast for 2009 is lower than the previously anticipated 2.1% decline for this year projected in the February 2009 release.
We are in a severe global recession where manufacturing is taking the brunt of the decline. Fortunately, we are starting to see signs of economic conditions beginning to stabilize, said Daniel J. Meckstroth, Manufacturers Alliance/MAPI chief economist. "We expect that the eventual recovery will be sluggish due to continued deleveraging by consumers as they move away from excessive debt and to greater savings. Lagging improvement in the job market and persistently high unemployment rates will restrain the pace of the recovery."
Meckstroth cited stimulus package spending, tax cuts, rising consumer spending, strengthening commodity prices, and recent improvement in the stock market as positive economic signs for the latter stages of 2009 and into 2010.
Manufacturing production growth declined by 3.2% in 2008, with expectations for an 11.8% decline this year. Manufacturing production in 2010 is anticipated to grow by 2.1%.
Production in non-high-tech industries is expected to decline by 11.6% in 2009 before increasing by 2.1% in 2010. Even the computers and electronics products sector, normally a consistent growth industry, will see a drop-off this year. High-tech industrial production is expected to decline by 10.7% in 2009 before rebounding to strong 8.5% growth in 2010.
The expenditure category for inflation-adjusted investment in equipment and software is likely to decrease by 18% in 2009, preceding 8.5% growth in 2010. Capital equipment spending in high-tech sectors will also feel the pinch. Inflation-adjusted expenditures for information processing equipment are expected to fall 10.6% in 2009 before rising by 7.8% in 2010.
The forecast expects industrial equipment expenditures to decline by a severe 27% this year and to further decline by 1.8% in 2010. The outlook for spending on transportation equipment is for wide swings in either direction. The report calls for a 38.3% decline in 2009 followed by a 46.9% increase in 2010.
Spending on non-residential structures is expected to retrench over the next two years, declining by 21.1% in 2009 and by an additional 11.6% in 2010.
Exports and imports will both experience a substantial downturn in 2009. After increasing by 6.2% in 2008, inflation-adjusted exports are anticipated to decrease by 13.6% in 2009 before experiencing 1.7% growth in 2010. Imports are expected to decline by 13.2% this year and to increase by 7.8% next year.
The MAPI forecast anticipates unemployment to average 9.1% in 2009 and 9.9% in 2010.