MAPI Forecast: Sluggish Pace, Volatility, Optimism

The Manufacturers Alliance for Productivity and Innovation (MAPI) Quarterly Economic Forecast predicts that inflation-adjusted gross domestic product (GDP) will expand 1.8 percent in 2013 and 2.8 percent in 2014, showing no change from MAPI’s February 2013 report.

ARLINGTON, Va. -- U.S. economic growth will be somewhat restrained, but not deterred, and improving fundamentals provide reason for optimism by the end of 2013 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 1.8 percent in 2013 and 2.8 percent in 2014, showing no change from MAPI’s February 2013 report. 

Manufacturing production, however, is expected to show growth of 3.1 percent in 2013 and 3.6 percent in 2014. The 2013 figure is an increase from 2.2 percent and the 2014 estimate is on par with the 3.6 percent predicted in the February forecast.

“There are a number of reasons for an improved outlook,” noted MAPI Chief Economist Daniel J. Meckstroth, Ph.D. “Consumer deleveraging is close to an end and households have the capacity to use more credit; housing prices are rising and with that change comes a virtuous cycle of increasing wealth, consumption, and income that feeds back into more housing activity; pent-up demand is releasing postponed spending for consumer durable goods; and the job market is repairing itself—employment growth is more balanced among the various sectors.”

Meckstroth noted that growth prospects might have been higher without the headwinds of wages rising lower than inflation; spendable income being reduced by higher taxes; government austerity worsening as sequestration cuts are reflected in spending reductions; and negative net exports both this year and next.

Production in non-high-tech industries is expected to increase 3.0 percent in 2013 and 3.5 percent in 2014. High-tech manufacturing production, which accounts for approximately 10 percent of all manufacturing, is anticipated to grow 4.4 percent in 2013 and 6.1 percent in 2014.

The forecast for inflation-adjusted investment in equipment and software is for growth of 5.6 percent in 2013 and 7.4 percent in 2014. Capital equipment spending in high-tech sectors will also rise. Inflation-adjusted expenditures for information processing equipment are anticipated to increase 6.3 percent in 2013 and 8.0 percent in 2014.

MAPI expects industrial equipment expenditures to advance 5.0 percent in 2013 and 11.4 percent in 2014. The outlook for spending on transportation equipment is for growth of 1.6 percent in 2013 and 5.5 percent in 2014. Spending on nonresidential structures will advance 2.6 percent in 2013 before improving 4.8 percent in 2014.

Inflation-adjusted exports are anticipated to increase 2.0 percent in 2013 and 4.5 percent in 2014. Imports are expected to grow 1.7 percent in 2013 and 5.2 percent in 2014. MAPI forecasts overall unemployment to average 7.6 percent in 2013 and 7.2 percent in 2014.

“Despite the volatility and struggle for growth, economic fundamentals have definitely improved,” Meckstroth said.

Such positives can be seen in MAPI’s prospects for employment. Manufacturing is expected to see a net increase in hiring, with the sector anticipated to add 137,000 jobs in 2013, well above the February forecast of 87,000 jobs. The outlook is for an increase of 352,000 jobs in 2014, an even larger advance from the 289,000 previously forecast.

The refiners’ acquisition price per barrel of imported crude oil is expected to average $96.80 per barrel in 2013 and $93.60 in 2014.

 

MAPI Economic Forecast

GDP Expenditure Categories

Inflation-Adjusted Percent Change

 

2012

2013(F)

2014(F)

Gross Domestic Product

2.2

1.8

2.8

Total Consumption

1.9

2.1

2.5

  Durables

7.8

6.8

4.8

  Nondurables

0.9

1.2

2.3

  Services

1.2

1.6

2.1

Nonresidential Fixed Investment

8.0

4.7

6.7

  Equipment & Software

6.9

5.6

7.4

    Information Processing Equipment

3.8

6.3

8.0

    Industrial Equipment

7.1

5.0

11.4

    Transportation Equipment

17.1

1.6

5.5

  Structures

10.8

2.6

4.8

Residential Fixed Investment

12.1

14.8

18.4

Exports

3.4

2.0

4.5

Imports

2.4

1.7

5.2

Federal Government

-2.2

-5.5

0.7

State & Local Government

-1.4

-1.0

0.1

     

F=Forecast

Source(s): MAPI, May 2013

 

MAPI Economic Forecast

Economic Indicators

Percent Change or Level as Specified

2012

2013(F)

2014(F)

Prices (% change)

 

 

 

Consumer Prices

2.1

1.6

1.9

  Excl. Food & Energy

2.1

1.9

2.2

Producer Prices, Finished Goods

1.9

1.8

1.0

Energy ($)

 

 

 

Imported Crude Oil ($ per barrel)

$101.1

$96.8

$93.6

Natural Gas Wellhead Price ($mmbtu)

$2.6

$3.9

$4.5

Other Key Measures

 

 

 

Nonfarm Inventory Change (Billion 2005$)

$60

$49

$55

Light Vehicle Sales (Million units)

14.4

15.3

15.7

Housing Starts (Million units)

0.782

0.987

1.243

Federal Surplus (NIPA, Billion $)

-$1,082

-$767

-$666

Current Account Balance (Billion $)

-$475

-$428

-$442

Labor

 

 

 

Unemployment Rate (%)

8.1

7.6

7.2

Payroll Employment (% change)

1.7

1.5

1.5

Production (% change)

 

 

 

Manufacturing (SIC Basis)

3.9

3.1

3.6

   Computers & Electronic Products

6.3

4.4

6.1

   Non-High-Tech Manufacturing

3.9

3.0

3.5

F=Forecast

Source(s): MAPI, May 2013

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