“Manufacturing production should outperform GDP growth…”
The U.S. manufacturing recovery continues on track and should outperform overall GDP growth through 2013, according to the Manufacturers Alliance for Productivity and Innovation (MAPI) U.S. Industrial Outlook (E0-103), a quarterly report that analyzes 27 major industries.
“There exists pent-up demand for consumer durable goods, particularly for motor vehicles, and firms are profitable and need to spend more for both traditional and high-tech business equipment,” said Daniel J. Meckstroth, Ph.D., MAPI Chief Economist and author of the analysis.
“In addition, strong—though decelerating—growth in emerging economies is still driving U.S. exports.”
Despite the fact that the global economy remains volatile, Meckstroth said the risk of recession for the U.S. has receded in the last three months.
Takeaway for precision machining shops:
Manufacturing industrial production increased 4.5 percent in 2011. MAPI forecasts that it will increase 4 percent in 2012 and 3.5 percent in 2013. The 2012 forecast is up 1 percent and the 2013 forecast is down 0.5 percent from the December 2011 report. Manufacturing production should outperform GDP growth, which MAPI estimates will be 2.2 percent in 2012 and 2.4 percent in 2013.
Thomas J. Sowell says:
The manufacturing sector is showing signs of improvement, although very slowly. The ISM Composite Index has been hovering around 53.0 – 56.0 for many months now. Not that bad but it could be better. Still, this is a sign that manufacturing is leading us out of the doldrums of recession. The GDP growth is sluggish at 2.4% annually. Again not that bad but it could be better.
The ball and chain holding down the economy right now is still the housing and mortgage crisis. Ben Bernanke and the Federal Reserve Board have vowed to keep interest rate near 0% through 2014. He continues to flood the market with monetary funds. A third round of Quantitative Easing (QE 3) may occur in late June, 2012. If this occurs it is a sure sign the Fed recognizes the unemployment picture is in need of serious help. The Fed will not take their foot off the gas until the employment statistics fall below 5.9 % The economy will not fully rebound until the housing market recovers and the employment picture improves. Energy prices will also hamper the economic recovery for the next 3-6 months as gasoline prices should begin to decline in September 2012.
speakingofprecision says:
Thomas, Great comments! If there is a QE 3 in June (I’ll call it “Let’s buy all the votes that we can” easing) Then I predict that the Yuan will become the world’s reserve currency in 2013. This Zero interest rate policy has destroyed the income of retirees who “did the right thing and saved” planning on the interest as income. The current policy steals food from the elderly- only so the Wall Street BAnks can continue their Casino activities without making those low interest funds available to those of us on Main Street.
Thanks for the comment.
Tom Sowell says:
Unfortunately for many, there actually can be a negative effect with the low interest rates, especially for the savers nearing retirement and many other people. The good news is that it should help some consumers when they purchase homes, automobiles, student loans, appliances, etc. It is true that the trickle-down theory is not yet reaching everybody, and mostly the people at the top are receiving the benefits and gains. But the economy was so deeply scared and traumatized by the financial crisis of 2008 that it is going to take another 4-5 years before it has fully recovered. This most likely will occur sometime around the years 2017-2018. I agree Wall Street is controlling everything, and the 9 largest banks are becoming even bigger and more powerful than before the financial crisis occurred. And also relying on foreign governments for capital is not very good policy. The one thing we entrepreneurs and individuals in the manufacturing sector must do is to remain positive and keep contributing to the overall economic progress so that the economy can make a strong comeback. This is the American way.