Aspen Forecast for Manufacturing Growth
Don't despair yet. On March 26, the Aspen Institute's Manufacturing and Society program and the Manufacturer's Alliance for Productivity and Innovation (MAPI) struck a more optimistic note when they released an econometric forecast for major growth in U.S. manufacturing.
The forecast isn't meant as a sure-fire prediction. Instead, Aspen and MAPI showed a "manufacturing resurgence" scenario based on a healthier world economy, greatly increased exports by the U.S. and a series of "modest" policy changes that would allow the country to benefit from new domestic energy sources, lower corporate tax rates and a lid on costly regulations.
What would be the result if the U.S. followed these recommendations? Aspen and MAPI said manufacturing's share of U.S. GDP would grow from the current 11.6% to 15.8% by 2025. U.S. GDP itself would grow an additional $1.5 trillion, with most of the increase due to manufacturing.
Manufacturing employment would grow by 307,000 a year under the resurgence scenario, totaling 3.7 million additional workers by 2025. That compares to a baseline projection where U.S. manufacturing would add just 23,000 workers annually.
The balance of trade in goods and services would dramatically shift from the current deficit of $500 billion annually to a surplus of approximately $700 billion, including nearly $200 billion in manufactured goods. Under the baseline scenario, the country's balance of trade would continue to run deficits.
"The robust results presented in the study are achievable with only modest acceleration of current trends, and none of the policy recommendations mark a radical departure from current policy trajectories," said Thomas J. Duesterberg, executive director of the Aspen Institute's Manufacturing and Society program and the report's author. "But they require a willingness to change in a disciplined way."
The truth is that it may be too early to tell if we are just showing a modest recovery from a terrible recession or if the alchemy of smarter government policies, abundant domestic energy and a better economic environment will indeed fuel a U.S. manufacturing renaissance.
