After a slow first half of 2013, expectations are for the U.S. economy to gradually return to moderate growth in the second half and through 2014, according to a new forecast.
The Manufacturers Alliance for Productivity and Innovation (MAPI) Quarterly Economic Forecast predicts that inflation-adjusted gross domestic product (GDP) will expand 1.6 percent in 2013 and 2.8 percent in 2014, the former down from 1.8 percent and the latter showing no change from MAPI’s May 2013 report.
Manufacturing production is expected to fare somewhat better than the overall economy, with anticipated 2.2 percent growth in 2013 and 3.2 percent growth in 2014.
The 2013 forecast is a decrease from 3.1 percent and the 2014 estimate is down from 3.6 percent predicted in the May forecast. The report also takes an initial look at 2015, when GDP is expected to rise 3.4 percent and manufacturing production should accelerate at a 4.1 percent clip.
“The outlooks for both the U.S. economy and the global economy are falling into place,” noted MAPI Chief Economist Daniel J. Meckstroth, Ph.D. “First half GDP growth in the U.S. was slow because of a number of factors—an increase in the payroll tax, the early effects of sequestration, and states’ austerity—taking a substantial amount out of the growth rate. But the payroll tax effect is diminishing and the sequester effect was not as disruptive as forecast; the government seems to be working around it. Additionally, Europe appears to be coming out of recession.”
Meckstroth notes that consumer spending is holding up reasonably well and business investment is growing at a moderate rate.
“Housing, despite being a lesser share of the economy, is nonetheless booming, and we’re convinced housing starts will be an economic driver,” he added. “This will have a positive domino effect on the supply chain and products that have been struggling, such as wood and glass and plastics products.”
Production in non-high-tech industries is expected to increase 2.1 percent in 2013 and 3.1 percent in 2014. High-tech manufacturing production, which accounts for less than 5 percent of all manufacturing, is anticipated to grow 5.2 percent in 2013 and 7.6 percent in 2014.