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Increases in income and consumption should provide the impetus for moderate U.S. economic and manufacturing growth through 2015, as forecast in a new report.
The Manufacturers Alliance for Productivity and Innovation (MAPI) Quarterly Economic Forecast predicts that inflation-adjusted gross domestic product will expand 2.6 percent in 2014 and 3.2 percent in 2015, the former down from 2.8 percent and the latter down from 3.4 percent from MAPI’s September 2013 report.
Manufacturing production is expected to fare better than the overall economy, with anticipated growth of 3.1 percent in 2014 and 4.1 percent in 2015. The 2014 forecast is a slight decrease from the 3.2 percent predicted in the September forecast; the 2015 projection is unchanged.
In examining the five-year horizon, GDP is expected to average 3.0 percent from 2014 to 2018 and manufacturing production should accelerate at a 3.4 percent clip.
“This is a reasonably good forecast—the worst is over and we’ll accelerate from here through 2016,” noted MAPI Chief Economist Daniel J. Meckstroth, Ph.D. “There will be a speed limit moving ahead, though, and we won’t see the 4 percent rate of growth of the past. Consumption should accelerate since there will be no payroll tax increase in 2014, unlike the 2 percent increase restored this year.
“The main drivers will be on the consumer side, especially durable goods,” he added. “Housing will grow as a result of pent-up demand, and an increase in housing activity means an increase for appliances and a ramp-up throughout the housing supply chain. Motor vehicle production will decelerate to a rate of moderate growth but still advance.”
Production in non-high-tech manufacturing industries is expected to increase 3.0 percent in 2014 and 4.0 percent in 2015. High-tech manufacturing production, which accounts for about 5 percent of all manufacturing, is anticipated to grow 6.8 percent in 2014 and 8.4 percent in 2015.
The forecast for inflation-adjusted investment in equipment is for growth of 7.6 percent in 2014 and 8.4 percent in 2015. Capital equipment spending in high-tech sectors will also rise. Inflation-adjusted expenditures for information processing equipment are anticipated to increase 10.0 percent in 2014 and 12.2 percent in 2015.
MAPI expects industrial equipment expenditures to advance 9.6 percent in 2014 and 7.8 percent in 2015. The outlook for spending on transportation equipment is for growth of 6.2 percent in 2014 and 3.1 percent in 2015. Spending on nonresidential structures is anticipated to improve by 3.4 percent in 2014 and 5.4 percent in 2015.
Inflation-adjusted exports are anticipated to increase 4.6 percent in 2014 and 5.7 percent in 2015. Imports are expected to grow 5.3 percent in 2014 and 6.2 percent in 2015. MAPI forecasts overall unemployment to average 6.9 percent in 2014 and 6.3 percent in 2015. For 2014 through 2018, unemployment is expected to average 5.9 percent.
Strong productivity gains and a slower rate of growth will affect prospects for manufacturing employment. The outlook is for an increase of 252,000 jobs in 2014, an increase from the 207,000 jobs in the September forecast, and 256,000 jobs in 2015, a marginal gain from 250,000 jobs in the previous report. After that, a deceleration is on the horizon. MAPI forecasts a gain of 99,000 manufacturing jobs in 2016, 28,000 in 2017, and 55,000 in 2018.
The refiners’ acquisition price per barrel of imported crude oil is expected to average $96.00 in 2014 and $93.70 in 2015.