US manufacturers see even lower US growth in ‘09

21 August 2008 22:13  [Source: ICIS news]

WASHINGTON (ICIS news)--The US economy shows no sign of near-term recovery this year and likely will face significant challenges in 2009, a leading manufacturers association said on Thursday.

 

The Manufacturers Alliance said it estimates US gross domestic product (GDP) growth this year will be an anaemic 1.6%, and the trade group said it expects the nation’s economy in 2009 will be even weaker with a bare expansion rate of 1.3%.

 

In May the alliance had predicted 2009 GDP would be 1.9%.

 

In normal times, the US economy would be expected to grow by 3% or 3.5% annually.

 

Alliance chief economist Daniel Meckstroth said that the manufacturing industry is expected to sink into negative territory this year, declining by 0.5% in 2008 after an already low 1.7% growth rate in 2007.

 

However, said Meckstroth, the US manufacturing sector is expected to return to positive if weak growth in 2009, when the alliance forecasts an expansion of 1.6%.

 

The manufacturing sector is an important downstream consuming industry for the chemicals industry.

 

Meckstroth also noted that the federal stimulus plan passed by Congress earlier this year - and which pumped some $150bn (€102bn) into the US consumer economy beginning in May - has probably run its course.

 

“That cash windfall is only temporary, and we expect a corresponding decline in consumer spending in the fourth quarter 2008 and into early 2009,” he said.

 

There has been talk in Congress of pushing through another stimulus package, and that sort of popular action could be more likely as members of Congress head into re-election campaigns in advance of the 4 November national elections.

 

But for now, said Meckstroth, “The weakness in the US economy shows no signs of immediate abatement, and significant challenges may last well into 2009.”

 

($1 = €.68)

 

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By: Joe Kamalick
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