NAM sees negative GDP in 2nd quarter
The U.S. economy is besieged by too many negative factors and is poised for negative growth in the second quarter, the National Association of Manufacturers forecast on Thursday.
The trade association said productivity would decline 1 percent in the second quarter, the first quarterly decline since the last recession seven years ago, due to ongoing weakness in the housing market, rising unemployment, high fuel costs, real wage declines, a slowdown in business investment and excess inventory build up.
Gross Domestic Product grew 0.9 percent in the first quarter.
Economic growth for the year is estimated to be 2.4 percent, said David Huether, the group’s chief economist, in a statement.
“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.”
Until recently, many economists believed that the United States would narrowly avoid a recession. But last week’s high unemployment figures and the continuing climb of oil prices, coupled with a weak dollar, have tipped expectations toward the negative side. A recession is technically declared after two consecutive quarters of negative growth.
The decline in business activity and trade has hurt the freight transportation sector.