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MAPI Forecast: Rough Ride in 2008 Precedes Anticipated Rebound in 2009
Manufacturers Alliance Quarterly Industrial Outlook sees worsening housing collapse continuing to depress related industries, but gloom giving way to rebound next year
Arlington, VA — April 18, 2008 — A worsening housing collapse continues to depress related industries, making for turbulent times in the U.S. manufacturing sector in 2008. But any gloom this year should give way to a rebound in 2009, according to the Manufacturers Alliance/MAPI Quarterly Industrial Outlook, a report that analyzes 27 major industries.
Housing starts were down 26 percent in the fourth quarter of 2007. They are expected to plummet another 33 percent in 2008, bottoming out in the second quarter as the United States remains "in the midst of the most severe housing downturn anyone could have imagined," said Daniel J. Meckstroth, chief economist for the Manufacturers Alliance/MAPI and author of the analysis.
Conversely, Meckstroth added, the longer term outlook looks much brighter, with a 32 percent increase in the rate of growth in housing expected for 2009, albeit from an extremely low base.
Exports a Bright Spot
According to MAPI's previously released quarterly economic forecast, inflation-adjusted exports are expected to expand by 8.1 percent in 2008 and by 9.9 percent in 2009, partially offsetting some of the negative effects of the housing crisis.
On an annual basis, MAPI forecasts only slight growth in the industrial sector this year. Manufacturing production is expected to increase 0.5 percent in 2008 before rebounding to 3.4 percent growth in 2009.
"Any recession is bad news for manufacturing; however, the structure of the current downturn is concentrated in finance, real estate and construction and not on manufacturing-intensive demand such as business equipment and exports," Meckstroth said. "Furthermore, the reduction in consumer spending may well hurt foreign imports more than domestically produced items."
Housing starts were down 26 percent in the fourth quarter of 2007. They are expected to plummet another 33 percent in 2008, bottoming out in the second quarter as the United States remains "in the midst of the most severe housing downturn anyone could have imagined," said Daniel J. Meckstroth, chief economist for the Manufacturers Alliance/MAPI and author of the analysis.
Conversely, Meckstroth added, the longer term outlook looks much brighter, with a 32 percent increase in the rate of growth in housing expected for 2009, albeit from an extremely low base.
Exports a Bright Spot
According to MAPI's previously released quarterly economic forecast, inflation-adjusted exports are expected to expand by 8.1 percent in 2008 and by 9.9 percent in 2009, partially offsetting some of the negative effects of the housing crisis.
On an annual basis, MAPI forecasts only slight growth in the industrial sector this year. Manufacturing production is expected to increase 0.5 percent in 2008 before rebounding to 3.4 percent growth in 2009.
"Any recession is bad news for manufacturing; however, the structure of the current downturn is concentrated in finance, real estate and construction and not on manufacturing-intensive demand such as business equipment and exports," Meckstroth said. "Furthermore, the reduction in consumer spending may well hurt foreign imports more than domestically produced items."
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