NAM Executive Committee Foresees 'Modest' Economic Growth

By John S. McClenahen The National Bureau of Economic research, the self-designated arbiter of such matters, has not declared the U.S. recession that began in March 2001 over. But it is sure looking that way for the hard-hit manufacturing sector of the economy. "For the second half of the year, we expect GDP growth [to be] almost 3% and see no chance of a double-dip recession," says Jerry J. Jasinowski, president of the National Association of Manufacturers (NAM), Washington, D.C. Nevertheless, "executives are concerned that continued uncertainty associated with weak profits, accounting and corporate governance scandals, the threat of terrorism, and global unrest are undermining investor confidence," adds Jasinowski. About three-quarters of NAM's 30-person executive committee anticipate an increase in corporate profits by the third calendar quarter of this year and more than four-fifths expect an increase by the fourth quarter. However, just under two-fifths of the senior executives expect profits to rise at more than an annual rate of 5% by the final quarter of 2002. "This sluggish improvement in profits will discourage capital investment," predicts Arthur D. "Don" Wainwright, NAM's chairman, and chairman and CEO of Wainwright Industries Inc., St. Louis. The executive committee expects second-quarter 2002 data when they are released, to show as much as a 5% decline in business fixed investment. But the growth in investment that a majority of the executive committee anticipates no later than the fourth quarter is likely to be only 3% -- or less.

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