Report: Economy is in “severe” recession
Industrial Distribution staff -- Industrial Distribution, 11/18/2008 10:16:00 AM
The United States economy is mired in a “severe recession,” according to a report from the Manufacturers Alliance/MAPI, and worse could be in store next year.
The group’s Quarterly Economic Forecast predicts a decline to 1.4 percent growth for the U.S. gross domestic product in 2008 and a further slide to 1 percent in 2009.
That’s down from MAPI’s August prediction of 1.3 percent growth for next year, which was itself a decline from the 1.9 percent growth the association predicted in May.
Many economists define a recession as occurring when the economy posts GDP declines for two or more consecutive quarters.
“The financial crisis worsened dramatically in the last three months and consumers suffered a major decline in wealth from declining housing prices and the plummeting stock market,” MAPI chief economist Daniel Meckstroth said. “High inflation, lower wage increases and a shrinking number of jobs made individuals poorer and looking for ways to build some savings to weather hard times. A consumer–led decline aggravated by a credit crunch is a recipe for trouble.”
The report’s gloomy outlook is slightly leavened by good news, including a prediction that crude oil prices will average $94.80 in 2008 before falling to $54.50 per barrel next year.
And exports should continue to grow more than imports, with a predicted 8.4 percent increase for this year and a 0.9 percent rise in 2009 for exports and import declines of 2.4 percent and 4.6 percent for 2008 and 2009, respectively.
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