Original Press Release
NAM Economist Forecasts Second Quarter GDP Decline
Press release date: June 12, 2008
LATEST NAM ECONOMIC FORECAST SAYS GDP WILL DECLINE BY 1 PERCENT IN SECOND QUARTER
"Trade Remains The Only Bright Spot On The Horizon," Huether says
WASHINGTON, D.C., June 12, 2008 - "Negative risks to the near-term outlook from the ongoing housing downturn have become amplified in recent months by declining employment, surging energy prices and accompanying real wage declines, a slowdown in business investment and excess inventory build up," said David Huether, chief economist of the National Association of Manufacturers.
"Trade remains the only bright spot on the horizon," Huether said. "Improvements in net exports, a temporary rise in inventories and government spending prevented an outright contraction in economic growth in the first quarter, with GDP edging up at an annual rate of 0.9 percent. The current forecast calls the GDP to decline at an annual rate of 1 percent in the second quarter, the first quarterly decline in nearly seven years.
"After growing by 2.6 percent in 2006 and 2.5 percent in 2007, a continuing downturn in housing, coupled with slower consumer spending and more moderate business investment, partially offset by continued growth in net exports, will result in the GDP growing by 1.2 percent in 2008, the slowest pace since 2001," Huether continued. "Growth will be essentially stalled in the first half of the year, followed by moderate 2.4 percent growth in the second half of the year. The modest acceleration in growth in the second half of the year will be driven, in part, by accommodative monetary and fiscal policies as well as a bottoming out in the housing recession.
"With the housing downturn, lower motor vehicle sales and a slowdown in business investment eclipsing export growth manufacturing output will edge up just 0.2 percent in 2008," Huether said. "A recovery will begin in the second half of the year followed by moderate 2.2 percent growth in 2009. The slowdown in output, driven by a slowdown in domestic activity, coupled with ongoing strong productivity growth, which rose by 4 percent over the most recent four quarters, will cause manufacturing employment to decline by 290,000 in 2008."
The full outlook is available at June 2008 Economic Outlook
The National Association of Manufacturers is the nation's largest industrial trade association, representing small and large manufacturers in every industrial sector and in all 50 states. Headquartered in Washington, D.C., the NAM has 11 additional offices across the country. Visit the NAM's award-winning web site at www.nam.org for more information about manufacturing and the economy.
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