06 June 2013 18:17 [Source: ICIS news]
WASHINGTON (ICIS)--US economic growth will be restrained this year but should gather strength at year end and ramp up to near-normal expansion rates during 2014, a major manufacturing group forecast on Thursday.
In its quarterly economic outlook, the Manufacturers Alliance for Productivity and Innovation (MAPI) said that it expects US gross domestic product (GDP) growth will be only 1.8% for this year but then increase to a 2.8% pace for full-year 2014.
In normal economic times, the US would be expected to have annual GDP growth rates of 3-3.5%.
“US economic growth will be somewhat restrained but not deterred,” MAPI chief economist Daniel Meckstroth said, “and improving fundamentals provide reason for optimism by the end of 2013 and through 2014.”
“There are a number of reasons for an improved outlook,” Meckstroth said.
“Consumer deleveraging is close to an end and households have the capacity to use more credit,” he said.
In particular, “housing prices are rising, and with that change comes a virtuous cycle of increasing wealth, consumption and income that feeds back into more housing activity”, he added.
“Pent-up demand is releasing postponed spending for consumer durable goods, and the job market is repairing itself - employment growth is more balanced among the various sectors,” Meckstroth said.
The nation’s economy might have seen better GDP growth this year, MAPI said, but has been restrained by several factors, including an inflation rate that, while small, has been rising faster than wage increases.
In addition, MAPI said that consumer spending has been reduced by higher tax rates that went into force on 1 January, and by cuts in federal spending mandated by the sequester budget limits.
Lastly, said MAPI, US GDP growth this year and next will be impeded by negative net exports - with the US importing more foreign goods than it sells abroad.
Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
Asian Chemical Connections