DRI/WEFA: Manufacturing To Continue Its Fall

Jan. 13, 2005
By John S. McClenahen This year, at this time, fall has a double meaning for U.S. manufacturing. It is the season of U.S. industry's continued economic discontent. "Orders for capital goods and anything related to computers are still showing ...
ByJohn S. McClenahen This year, at this time, fall has a double meaning for U.S. manufacturing. It is the season of U.S. industry's continued economic discontent. "Orders for capital goods and anything related to computers are still showing double-digit, year-over-year declines. There is no bright spot, and the situation threatens to get worse before it gets better, since the uncertainty created by the Sept. 11 attacks has caused businesses as well as consumers to put many spending decisions on hold," ominously observes DRI/WEFA, a Lexington, Mass.-based economic forecasting firm. "In nominal terms, computer spending is not expected to regain its previous high until 2006," say its economists. Blame part of the lack of business investment on continuing global excess capacity in any number of industries. And blame part of it on the continuing lack of rising demand, sales, and profits. "Businesses need to see increasing sales and profits before they step up spending on new equipment and facilities," DRI/WEFA reminds. But eventually significant demand will return -- possibly in mid-2002 -- if only for replacement equipment. And "perhaps the new Microsoft operating system and third-generation cellular will prove to be essential to business and intriguing to individuals," speculate DRI/WEFA's economists.

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