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Economic growth to slow further into 2009-MAPI
WASHINGTON, Aug 21 (Reuters) - The U.S. economic slump expected to continue well into next year as the impact of consumers spending their government rebate checks dwindles, a manufacturing survey showed on Thursday.
Inflation-adjusted gross domestic product growth will slow to 1.6 percent in 2008 and decelerate to 1.3 percent in 2009, according to the Manufacturers Alliance/MAPI Quarterly Economic Forecast. The 2009 GDP forecast is down from 1.9 percent growth projected in the May report.
"The Internal Revenue Service accelerated the payment of tax rebates this year under the economic stimulus plan, getting cash in consumers' hands earlier than expected," said chief economist Daniel Meckstroth.
"The cash windfall is only temporary, and we expect a corresponding decline in spending in fourth quarter 2008 and into early 2009," Meckstroth said.
Exports and imports will likely continue to buttress the soft economic environment, the group said. Export growth should continue to outpace that of imports by a wide margin.
Inflation-adjusted exports should rise 8.4 percent in 2008 and 7.3 percent in 2009, while imports are expected to decline by 1.4 percent this year and to increase by only 0.4 percent next year, MAPI said in its quarterly survey.
"Consumers are reducing discretionary purchases; these items tend to be imported," Meckstroth said. "At the same time, a weak dollar has improved the competitive position of U.S. exports of goods and services in the world marketplace."
"A declining dollar is beneficial and has made a major contribution in keeping the economy growing amid severe economic shocks," Meckstroth said.
The group said manufacturing production growth will decline 0.5 percent in 2008 following 1.7 percent growth in 2007 but foresee a rebound in 2009 at 1.6 percent.
The previous quarterly MAPI report had forecast production to grow by 0.4 percent in 2008 and by 3.1 percent next year.
Earlier this month, the Labor Department said the U.S. unemployment rate hit its highest in four years during July as employers cut jobs for a seventh straight month. The jobless rate climbed to 5.7 percent from 5.5 percent in June.
MAPI forecast the unemployment rate at an average 5.4 percent in 2008 and 6.0 percent in 2009. (Reporting by Nancy Waitz, Editing by Chizu Nomiyama)
