Solid growth predicted over next two years

ARLINGTON, VA-The Manufacturers Alliance/MAPI continues to project solid growth in the next two years for the U.S. economy and the manufacturing sector. Evidence used in the forecast shows that a sustainable recovery remains on track.

The Manufacturers Alliance/MAPI Quarterly Economic Forecast predicts inflation-adjusted gross domestic product (GDP) growth to be 4.5% in 2004 and 3.7% in 2005. The 2004 prediction is down slightly from 4.9% in the May forecast, while the 2005 outlook remains the same. By supplying major assumptions for the economy and running simulations through the Global Insight Macroeconomic Model, the Manufacturers Alliance/MAPI generates unique macroeconomic and industry forecasts.

Manufacturing activity should continue to grow faster than the general economy, with industrial production growth expected to increase 6.0% in 2004 and 5.7% in 2005. The largest percentage gains will come from a rebound in the high-tech sectors of manufacturing. Computers and electronic products are expected to rise 19.6% in 2004 and 16.6% in 2005.

Non-high-tech industries will grow moderately this year and next.

Capital investment will play a role in sustaining growth for the first time since 2000. Real investment in equipment and software should increase 12.4% in 2004 and 6.8% in 2005, growing several times faster than the general economy. Net exports also will contribute to economic growth. Inflation-adjusted exports should rise 11.1% this year and 11.5% next year, while imports will increase at a more moderate 9.5% in 2004 and 5.0% in 2005. The current account deficit should begin to shrink next year.

The forecast also envisions the unemployment rate remaining relatively stable, averaging 5.6% in 2004 and 5.4% in 2005.

"We expect an acceleration in the pace of economic growth in the second half of this year," says Daniel J. Meckstroth, chief economist for the Manufacturers Alliance/MAPI. "Capital equipment investment should surge as businesses take advantage of accelerated depreciation before its end-of-year expiration and consumer spending growth steps up, propelled by job growth generated income. Domestic manufacturing benefits from a stronger expansion here and abroad."

On Demand Join this webinar to learn how companies of all sizes are adopting easy-to-use cobots to overcome the labor shortage, handle multi-shift operations, scale production on-the-fly, and solve many other challenges.

The Quality Show South is the place to learn from experts at the top of their field and meet with leading suppliers of testing, measurement, inspection, software, and quality equipment.

Join us in Nashville, TN, and network with quality manufacturing professionals from across the southern U.S.—including automotive, appliances, electronics, aerospace, medical devices, and more—and improve your processes for manufacturing within strict tolerances.