Economic tailwinds are slightly outpacing countervailing headwinds in the U.S., and the resulting moderate growth should continue to provide a slight boost for manufacturing, according to a report from Cliff Waldman, chief economist for the MAPI Foundation.
Waldman's report, Growing Upside Potential for U.S. Manufacturing Growth, includes the MAPI Foundation’s most recent forecast, which remains mostly unchanged from February and June. Between 2017 and 2020, MAPI projects annual U.S. GDP growth to be an average 2.2 percent across the four-year period.
It also forecasts U.S. manufacturing growth to average 1.7 percent from 2017 to 2020, just slightly faster than the 1.6 percent average growth rate projected in June.
According to Waldman, U.S. economic expansion, which began in June 2009, is showing no signs that it is about to end. It is currently benefiting from a host of encouraging signs, including:
- The rebound from China’s protracted slowdown continues.
- The eurozone economy is showing markedly better growth performance.
- Japan has now had the longest stretch of growth in 11 years.
- The persistent fall in the value of the dollar, nearly 7 percent since January, should be a positive for U.S. manufacturers in terms of global competitive pricing, somewhat mitigating the challenges that arose with the dollar’s post-2014 appreciation.
But the U.S. is also facing a few uncertainties that could derail the steady growth, starting with recent extreme weather.
"The impact of Hurricane Harvey that descended upon South Texas and Louisiana in late August is the most significant uncertainty for U.S. manufacturing growth for the balance of 2017 and into the early months of 2018," Waldman says. "While the impact of Hurricane Irma, which ravaged the large state of Florida, won’t be known for some time, it seems clear that it will exacerbate the already substantial supply chain interruptions that follow from Hurricane Harvey, with measurable implications for manufacturing growth performance."
Waldman also warns that "escalating U.S. political and policy uncertainties resulting from a multitude of difficulties with the current U.S. administration could have significant financial market repercussions, which could adversely affect U.S. growth."