MAPI: Export Growth Should Balance Out Weaknesses in U.S. Economy - Modern Distribution Management

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MAPI: Export Growth Should Balance Out Weaknesses in U.S. Economy

In the face of continuing weakness in the housing sector, growth in the U.S. economy is expected to be slower than previously anticipated, according to a new Manufacturers Alliance/MAPI quarterly report.


The Manufacturers Alliance/MAPI Quarterly Economic Forecast forecasts that inflation-adjusted GDP growth, 3.3 percent in 2006, will slow to 1.9 percent in 2007 before regaining some strength, rising to 2.5 percent in 2008.

The housing downturn will likely be more severe, more widespread, and last longer than most analysts expected," said Daniel J. Meckstroth, Manufacturers Alliance/MAPI Chief Economist. "... Manufacturing is buttressed, however, by somewhat better prospects in the trade sector. Exports are expected to perform well in relation to imports and ...
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In the face of continuing weakness in the housing sector, growth in the U.S. economy is expected to be slower than previously anticipated, according to a new Manufacturers Alliance/MAPI quarterly report.

The Manufacturers Alliance/MAPI Quarterly Economic Forecast forecasts that inflation-adjusted GDP growth, 3.3 percent in 2006, will slow to 1.9 percent in 2007 before regaining some strength, rising to 2.5 percent in 2008.

The housing downturn will likely be more severe, more widespread, and last longer than most analysts expected,” said Daniel J. Meckstroth, Manufacturers Alliance/MAPI Chief Economist. “… Manufacturing is buttressed, however, by somewhat better prospects in the trade sector. Exports are expected to perform well in relation to imports and moderately reduce the trade deficit.

Manufacturing production growth will decelerate this year, trending downward from 4.7 percent growth in 2006 to 2 percent growth in 2007. Concurrent with the overall GDP, however, MAPI forecasts industrial production to rebound fairly significantly, increasing 2.9 percent in 2008. Still, these figures are down from the previously forecast 2.1 percent growth and 3.3 percent growth, respectively, in the May 2007 forecast.&nbsp ;

One segment that should maintain decent growth in manufacturing is computers and electronic products. Inflation-adjusted spending for this sector is forecast to rise a solid 10.8 percent in 2007 and 11.8 percent in 2008. Production in non-high-tech industries will grow by a modest 0.9 percent this year and by 1.7 percent in 2008.

Large percentage gains in spending, at least relative to the overall economy, will come in the high-tech sectors. Inflation-adjusted expenditures for information processing equipment are expected to rise 7.1 percent in 2007 and 6.1 percent in 2008, continuing to grow several times faster than the general economy.

Nevertheless, inflation-adjusted investment in equipment and software should decelerate to 0.8 percent growth in 2007 before posting 4.4 percent growth in 2008& mdash; both are well below the growth rate that would be considered normal at this stage of the business cycle.&nbsp ;

Spending on non-residential structures also is forecast to increase both years, with a 9.4 percent rise in 2007, but only an additional 1 percent growth in 2008. The forecast calls for industrial equipment expenditures to increase 1.6 percent in 2007 before declining by 1.7 percent in 2008. Conversely, MAPI expects a reverse pattern of fluctuation in spending on transportation equipment, with that component seeing a 10.6 percent decline this year before experiencing 7.8 percent growth in 2008.

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