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The Manufacturers Alliance/MAPI Quarterly Economic Forecast predicts that inflation-adjusted gross domestic product (GDP), which grew by 1.1 percent in 2008, will decline 2.9 percent in 2009 before rebounding to 1.9 percent growth in 2010. The GDP forecast for 2009 in the current MAPI report is lower than the previously anticipated 2.1 percent decline for this year projected in the February 2009 release.

“We are in a severe global recession where manufacturing is taking the brunt of the decline. Fortunately, we are starting to see signs of economic conditions beginning to stabilize,” said Daniel J. Meckstroth, Manufacturers Alliance/MAPI Chief Economist. “We expect that the eventual recovery will be sluggish due to continued deleveraging by consumers as they move away from excessive debt and to greater savings. Lagging improvement in the job market and persistently high unemployment rates will restrain the pace of the recovery."

“There are nonetheless inklings of a future firming economy,” he added, “including the stimulus package beginning to take effect, tax cuts, rising consumer spending, strengthening commodity prices, and recent improvement in the stock market. These ‘green shoots’ offer a glimmer of hope moving into the latter stages of 2009 and into 2010.”

Meckstroth believes manufacturers’ profitability will be in a better position coming out of the recession than they were after the previous downturn in 2001. “While it still may take years to recoup production levels, industry learned a lesson in frugality in 2001,” he said. “Manufacturers did not over-invest in this cycle and they proactively cut costs at the first sign of falling demand.”

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