Long-awaited growth is finally poised to return to the U.S. economy, albeit at a far more modest rate than the typical recovery from previous recessions, according to a new report from The Manufacturers Alliance. The group predicts that inflation-adjusted gross domestic product (GDP) will decline 2.5% in 2009, before rebounding to 2.4% growth in 2010, and by 3.5% in 2011.

"We are pleased there is growth in the overall economy, and surprisingly strong growth in manufacturing," said Daniel J. Meckstroth, Manufacturers Alliance/MAPI Chief Economist.  "Yet by historical standards it is still modest compared to recoveries from past recessions.

"Manufacturing production growth, at 4.6%, will grow faster than the general economy, at 2.4%, in 2010,” he said. "An inventory swing in the goods producing sector is a major reason for the acceleration in manufacturing production. We expect manufacturing growth to be led by high technology products, semiconductors, and computers."

Manufacturing production growth is expected to decline 11.3% this year before rebounding to 4.6% growth in 2010 and to 6% growth in 2011.

Production in non-high-tech industries is expected to decline by 11.3% in 2009 before increasing by 2.3% in 2010 and by 5.8% in 2011. The computers and electronics products sector will also see a drop-off this year, declining by 9.4%. High-tech manufacturing production, however, is expected to improve markedly, to 15.9% growth in 2010 and by a healthy 17.5% growth in 2011.

The expenditure category for  investment in equipment and software is likely to decrease by 17.2% in 2009, before experiencing 9.1% growth in 2010 and 15.2% growth in 2011. Capital equipment spending in high-tech sectors will continue the trend. Expenditures for information processing equipment are expected to fall 6.5% in 2009 before rising by 6.9% in 2010 and by 7.8% in 2011.

The forecast expects industrial equipment expenditures to decline by a severe 22.7% this year. The spending will recover, however. MAPI predicts 3.5% growth in 2010 and a significantly improved 22.6% growth in 2011. The outlook for spending on transportation equipment is for excessively wide swings in either direction. The analysis projects a 49.6% decline in 2009, followed by a 55.2% increase in 2010 and a 46.7% advance in 2011.

Spending on non-residential structures is expected to retrench over the next two years, declining by 18.3% in 2009, and by an additional 16% in 2010 before seeing growth of 1.1% in 2011.

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