Manufacturers Group Sees ‘Slow Growth’ for Economy

A manufacturing group lowered its economic forecast through next year on Monday, saying the U.S. economy has downshifted to a "slow-growth mode" as consumers spend less and save more.

The Manufacturers Alliance/MAPI in its latest quarterly economic forecast predicts inflation-adjusted GDP will rise 2.9 percent this year and 2.6 percent next year. The forecast is down from the previously estimated 3.3 percent and 2.9 percent, respectively, in the May 2010 quarterly report.

"There is a somewhat bleaker outlook amid weaker economic data and it clearly indicates a slow growth mode," said Daniel J. Meckstroth, chief economist at the Arlington, Va.-based research group.

"The numbers for June retail trade, inventories, and foreign trade have all come in weaker than the Bureau of Economic Analysis had estimated in the preliminary estimate of second quarter GDP growth," Meckstroth said. "The homeowners' tax credit has expired. Consumers are not spending as much. They are saving more and repaying debt, which is good for the long run but not the near term. The inventory swing is over and the benefits of the stimulus have basically run their course."

By The Numbers: ISM monthly U.S. Manufacturing's New Export Orders Index.

Replenishment of inventories slashed during the recession boosted freight volume earlier this year. Through July, intermodal traffic was up 13.5 percent year-to-year, according to the Association of American Railroads.

PIERS Global Intelligence Solutions, a sister company of The Journal of Commerce, said U.S. containerized imports showed year-to-year increases of 15.8 percent in the first quarter and an estimated 17.6 percent in the second quarter.

PIERS expects slowing economic growth, held back by weak employment and housing markets, to restrict growth in containerized imports to 7.8 percent in the current quarter and 1.4 percent in the fourth quarter, for a 10.3 percent annual increase.

Manufacturing, which has led the economic recovery, should continue to hold its own, the MAPI report said.