By John S. McClenahen Like a persistent tropical storm, the economy continues to punish U.S. manufacturing. "We have been in recession for the last six months," laments Jerry J. Jasinowski, president of the National Assn. of Manufacturers (NAM), Washington. However, there's likely to be better weather in the southern U.S., which has been pounded by Tropical Storm Allison for about a week, months before there's significant improvement in the U.S. economy. The NAM's latest forecast doesn't anticipate much of a U.S. economic recovery before the fourth calendar quarter of this year -- and even then with precious little help from manufacturing. For example, a recent survey of NAM directors shows their companies spending only 0.6% more on IT equipment and software for the rest of the year -- and just a 1% rise in their spending for other equipment and facilities. Indeed, more than one-third of the directors foresee no growth in their companies' capital outlays for the remainder of 2001. The combination of recently enacted individual income-tax cuts and interest-rate reductions by the Federal Reserve Board since the first of the year has the potential "to bring us back," says W.R. "Tim" Timken, chairman and CEO of the Timken Co., Canton, Ohio. But "the question is when and [the answer] from manufacturing is later rather than sooner," says Timken, who's also NAM's current chairman. Inflation is not now an NAM economic worry. Nor apparently should it be. The Producer Price Index for May, for example, rose just 0.1%, compared with a 0.3% increase in April, reports the U.S. Labor Dept.'s Bureau of Labor Statistics. "Deflationary pressures resulting from slower growth are starting to emerge," notes Gerald D. Cohen, a senior economist at Merrill Lynch & Co., New York. "Excluding tobacco prices, which jumped 4.9% in May, both the headline and core PPI would have declined 0.1%." Health-care costs and a strong U.S. dollar do worry the NAM, however. "Our No. 1 economic priority is to prevent enactment of the McCain-Kennedy health-care bill," says Jasinowski. Manufacturers are most concerned about a provision that would allow employers or insurance carriers to be sued, says Gerry Letendre, president of Diamond Casting & Machine Co. inc., Hollis, N.H. Meanwhile, "the distorted exchange rate" -- particularly between the U.S. dollar and the euro, the common currency in 12 of the 15 European Union countries -- "is hurting sales, profits, and jobs," complains Timken. "No amount of cost cutting can offset a nearly 30% dollar markup since early 1997."