Forecast: U.S. Industrial Production Will Outpace GDP This Year And Next

By John S. McClenahen U.S. industrial production, which was hit hard by the 2001 recession, will grow faster than overall GDP in both 2004 and 2005, suggests a new forecast from the Manufacturers Alliance/MAPI, an Arlington, Va.-based public policy and business research group. Industrial output is expected to advance 6.1% this year and grow 6% next year, compared with respective inflation-adjusted GDP increases of 4.9% and 3.4%. The alliance's manufacturing growth projection for 2004 is roughly in line with the National Association of Manufacturers' most recent prediction. The alliance also foresees the U.S. unemployment rate drifting down to a 5.2% average in 2005 from a 5.5% average in 2004. The U.S. unemployment rate in December 2003, the most recent month for which data are available, was 5.7%. The biggest GDP growth gains, in percentage terms, will come from manufacturing's high-tech sector, according to the alliance's forecast. Computers and electronic products are expected to post 20.4% growth this year and 16.3% next year. Capital investment should be a growth factor as well, for the first time since 2000. Inflation-adjusted investment in equipment and software is seen increasing 13% this year and 8.4% next year. And as the rate of increase in imports moderates to 7.7% this year and 6.8% in 2005, U.S. exports should post an increase of 11.6% this year and 13.2% next year, the forecast predicts.

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