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NAM: Manufacturing Decline Could Halve U.S. Growth

By John S. McClenahen If the manufacturing sector is allowed to continue to decline, the growth rate of the U.S. economy could fall to half its historical average. That's the stark warning found on the final page of a "white paper" on the future of U.S. manufacturing from the National Association of Manufacturers (NAM), Washington, D.C. The report was released June 10. Many economists now put the long-term average annual growth rate of the U.S. economy at 3.5%. A 50% reduction put growth between 1.7% and 1.8% annually, just under the very modest 1.9% annual rate at which the U.S. Commerce Department says GDP grew in the first quarter of this year. It's not clear that either manufacturing or the economy will decline to the point at which U.S. living standards are greatly diminished. But the economic analysis prepared for NAM by Joel Popkin and Co., Washington, D.C., identifies six what it terms "troublesome" signs. They are manufacturing's "anemic" recovery from the 2001 recession; an "exceptionally rapid" loss of manufacturing jobs; the possible inability of U.S. manufacturing to maintain its R&D spending pace; manufacturing productivity increases that "may reflect only downsizing"; a diminished U.S. role in global merchandise trade; and fewer American manufacturers building new facilities in the U.S. One question raised by the study, which NAM is sending to all members of Congress, is whether the U.S. now needs a "national manufacturing policy." Clearly wary of anything like government picking industrial winners and losers, "I would be reluctant to say we need a manufacturing policy in [that] narrow sense," states Jerry J. Jasinowski, NAM's president.

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