Advertisement
News
Advertisement

MAPI Forecast: Consumer Spending And Investment To Lead Growth

Fri, 03/07/2014 - 9:42am
The Manufacturers Alliance for Productivity and Innovation (MAPI)

A modest rise in consumer spending combined with an increase in business investment in both equipment and structures should help increase U.S. economic growth, according to a new report.

The Manufacturers Alliance for Productivity and Innovation (MAPI) Quarterly Economic Forecast predicts that inflation-adjusted gross domestic product will expand 2.8 percent in 2014 and 3.2 percent in 2015. The former is an increase from 2.6 percent and the latter equal to the 3.2 percent from MAPI’s December 2013 report.

Manufacturing production is expected to fare better than the overall economy, with anticipated growth of 3.2 percent in 2014 and 4.0 percent in 2015. The 2014 forecast is a slight increase from 3.1 percent predicted in the December forecast while the 2015 projection is down from 4.1 percent.

“The economic environment we expect for the next two years is for decently strong employment growth, a falling unemployment rate, and relatively low inflation,” noted MAPI Chief Economist Daniel J. Meckstroth, Ph.D. “The fastest growth in manufacturing will come from the rebound in the housing market, particularly in wood products, furniture, nonmetallic mineral products, and electrical equipment, appliances, and components.”

Production in non-high-tech manufacturing industries is expected to increase 2.9 percent in 2014 and 3.8 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 7.2 percent in 2015.

The forecast for inflation-adjusted investment in equipment is for growth of 6.5 percent in 2014 and 9.8 percent in 2015. Capital equipment spending in high-tech sectors will also rise. Inflation-adjusted expenditures for information processing equipment are anticipated to increase 5.7 percent in 2014 and a strong 14.7 percent in 2015.

MAPI expects industrial equipment expenditures to advance 8.4 percent in 2014 and 10.9 percent in 2015. The outlook for spending on transportation equipment is for growth of 5.6 percent in 2014 and 4.1 percent in 2015. Spending on nonresidential structures is anticipated to improve by 3.5 percent in 2014 and 3.9 percent in 2015.

Residential fixed investment is forecast to increase by double digits in both years, by 12.5 percent this year and an even more robust 18.8 percent in 2015.

“We anticipate 1.13 million housing starts in 2014 and 1.47 million starts in 2015,” Meckstroth said. “There is pent-up demand for housing and a need for household formation. The solid increase, however, is from very low levels.”

Inflation-adjusted exports are anticipated to increase 5.1 percent in 2014 and 4.3 percent in 2015. Imports are expected to grow 3.3 percent in 2014 and 6.9 percent in 2015. MAPI forecasts overall unemployment to average 6.4 percent in 2014 and drop to 5.8 percent in 2015.

The outlook is for an increase of 356,000 manufacturing jobs in 2014, a substantial advance from the anticipated 252,000 jobs in the December forecast, but decreasing to 197,000 jobs in 2015, a decline from 256,000 jobs in the previous report.

The refiners’ acquisition cost per barrel of imported crude oil is expected to average $94.30 in 2014 and $90.20 in 2015.

MAPI Economic Forecast

GDP Expenditure Categories

Inflation-Adjusted Percent Change

2012

2013

2014(F)

2015(F)

Gross Domestic Product

2.8

1.9

2.8

3.2

Total Consumption

2.2

2.0

2.7

3.1

  Durables

7.7

7.1

7.1

6.4

  Nondurables

1.4

2.1

3.1

2.5

  Services

1.6

1.2

1.9

2.8

Nonresidential Fixed Investment

7.3

2.6

5.0

6.8

  Equipment

7.6

2.9

6.5

9.8

    Information Processing Equipment

2.7

3.0

5.7

14.7

    Industrial Equipment

5.5

3.3

8.4

10.9

    Transportation Equipment

22.2

0.0

5.6

4.1

  Intellectual Property Products

3.4

3.1

4.1

4.5

  Structures

12.7

1.3

3.5

3.9

Residential Fixed Investment

12.9

12.0

12.5

18.8

Exports

3.5

2.8

5.1

4.3

Imports

2.2

1.4

3.3

6.9

Federal Government

-1.4

-5.1

-2.0

-0.1

State & Local Government

-0.7

-0.2

0.5

0.9

F=Forecast; Source(s): MAPI, November 2013

MAPI Economic Forecast

Economic Indicators

Percent Change or Level as Specified

2012

2013

2014(F)

2015(F)

Prices ( percent change)

 

 

 

 

  Consumer Prices

2.1

1.5

1.3

1.7

   Excl. Food & Energy

2.1

1.8

1.7

1.9

  Producer Prices, Finished Goods

1.9

1.2

1.0

0.6

Energy ($)

 

 

 

 

  Imported Crude Oil ($ per barrel)

$101.1

$98.0

$94.3

$90.2

  Natural Gas Henry Hub Price ($mmbtu)

$2.7

$3.7

$3.9

$4.0

Other Key Measures

 

 

 

 

  Nonfarm Inventory Change (Billion 2009$)

$69

$62

$57

$65

  Light Vehicle Sales (Million units)

14.4

15.5

16.0

16.4

  Housing Starts (Million units)

0.783

0.927

1.135

1.471

  Federal Surplus (NIPA, Billion $)

-$1,110

-$751

-$662

-$561

  Current Account Balance (Billion $)

-$440

-$376

-$316

-$360

Labor

 

 

 

 

  Unemployment Rate ( percent)

8.1

7.4

6.4

5.8

  Payroll Employment ( percent change)

1.7

1.6

1.7

2.2

Production ( percent change)

 

 

 

 

 Manufacturing (SIC Basis)

3.9

2.3

3.2

4.0

   Computers & Electronic Products

6.3

4.4

6.8

7.2

    Non-High-Tech Manufacturing

3.9

2.2

2.9

3.8

F=Forecast; Source(s): MAPI, February 2014


The Manufacturers Alliance for Productivity and Innovation (MAPI), founded in 1933, contributes to the competitiveness of U.S. manufacturing by providing economic research, professional development, and an independent, expert source of manufacturing information. Learn more at www.mapi.net.

 

Topics

Advertisement

Share this Story

X
You may login with either your assigned username or your e-mail address.
The password field is case sensitive.
Loading