The Manufacturers Alliance/MAPI predicts in its quarterly economic report that inflation-adjusted gross domestic product will grow 2.8% in 2010, followed by 3% growth in 2011, while unemployment will remain high at 10% in 2010 and 9.4% in 2011.
Growth will be driven by stimulus spending and tax cuts for consumers, MAPI reports. The most notable growth will occur in transportation equipment, information technology and residential housing sectors. The rebuilding of business inventories also will provide growth momentum.
"A moderate recovery is undoubtedly under way, but it is the pace of future near-term growth that is questionable," said Daniel Meckstroth, Manufacturers Alliance/MAPI chief economist. "We believe that consumers will continue to deleverage and that the previous growth model based on credit availability to marginally creditworthy borrowers is not repeatable. Government tax cuts have replaced lost income for the moment, but eventually spending has to be grounded on wage increases and employment growth. A jobless recovery is not an option in this cycle."
Manufacturing production growth declined 11.2% in 2009 and is expected to rebound to 5.4% growth in 2010, and to an additional 5.3% growth in 2011.
Production in non-high-tech industries is expected to increase by 3.3% in 2010 and by 4.8% in 2011. High-tech manufacturing production is anticipated to improve significantly, with solid 14.6% growth in 2010 followed by robust 17.8% growth in 2011.
Exports and imports will both be trending upwards. Inflation-adjusted exports are anticipated to improve by 9.2% in 2010 and by 7.6% in 2011. Imports are expected to grow by 9.6% in 2010 and by 6.8% in 2011.