Manufacturers Alliance Foresees Slowing Economy

ByJohn S. McClenahen Although Manufacturers Alliance/MAPI continues to project solid growth for the U.S. economy during the next two years, the Arlington, Va. business and public policy research group expects growth to be at a slower rate than it forecast three months ago. The alliance now forecasts that the U.S. economy, adjusted for inflation, will grow at 3.9% this year and 3.4% in 2005. Three months ago the alliance expected real GDP growth would be 4.5% this year and 3.7% next year. (Merrill Lynch & Co., for example, currently projects GDP growth at 4.3% this year and 3% in 2005.) "The surge in oil and other commodity prices and rising penetration from imported goods is taking its toll on the industrial sector," says Daniel J. Meckstroth, chief economist at Manufacturers Alliance/MAPI. The alliance continues to expect manufacturing to outpace the general economy for the next year or so, although its rates of growth, too, are tempered from three months ago. Industrial production is now expected to increase 5.2% this year and 4.1% in 2005; in August the alliance put the production growth estimates at 6% and 5.7%, respectively.