NAM Expects Sluggish Growth In 2008

WASHINGTON — The National Association of Manufacturers (NAM) released its 2008 Economic Forecast, which indicates “a recession being averted but a significant deceleration in GDP growth through the first half of this year due to surging energy prices and a slowdown in corporate profits that will hold down business spending.”

 

The GDP is expected to grow by 1.4 percent in the first half of 2008 after slowing from 4.9 percent in the third quarter of 2007 to 2 percent in the fourth quarter.

 

“The ripple effect of the housing downturn and a slowdown in motor vehicle production has caused a significant hit to the overall manufacturing economy,” said David Huether, the NAM’s chief economist. “While these sectors shed 125,000 jobs and saw output decline by 2.4 percent last year, the remaining sectors picked up 18,000 jobs and output rose by 2.7 percent.”

 

Overall manufacturing output rose 1.8 percent in 2007, its slowest pace in four years, and is forecast to continue at 1.9 percent in 2008.

 

Manufacturing employment is expected to drop by 90,000 in the coming year.

 

“The best way to create jobs is to jump start business investment with an enhanced capital-cost recovery system,” said Dorothy Coleman, the NAM’s vice president for tax and domestic economic policy.

 

The NAM is currently advocating a tax relief proposal that includes a 50 percent bonus depreciation provision for business investment, which would nearly double the growth of business investment this year, resulting in a half percentage point added to GDP growth.

 

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