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Editor’s Note: 2016 Economic Projections - Growth Will Be Good But Not Great

CFOs believe North America can continue to shoulder the global burden of economic growth, while Area Development’s Corporate Survey respondents are evenly split on whether or not the U.S. economy has achieved a continuous growth track.

Q1 2016
The new year has gotten off to a bumpy start. Declines in oil prices and worries about the slowing Chinese economy have led to a global stock market selloff. The strong dollar has made U.S.-made products more expensive overseas, causing the ISM manufacturing index to register below 50 percent, indicating a contracting manufacturing sector.

Despite an uptick in hiring, with all these worries about global growth, Americans are keeping their wallets closed. According to Morgan Stanley, consumer spending accounts for two thirds of the nation’s growth. With consumers pulling back on purchases, it’s no wonder manufacturing is contracting.

Decreasing optimism is borne out by PwC’s Q4 Manufacturing Barometer, with only 46 percent of those surveyed saying they were optimistic about the direction of the U.S. economy. According to the report, the surveyed manufacturers are holding their capital spending and hiring plans in check in this “challenging business climate.” In contrast to the PwC survey, although the CFOs polled by Deloitte in Q4 2015 are concerned about the global economy, they believe that North America (and the U.S. in particular) can continue to shoulder the burden of economic growth in 2016.

With whom do those surveyed by Area Development in the final quarter of 2015 agree? Interestingly, the respondents to our 30th Annual Corporate Survey are pretty much evenly split: 48 percent believe the U.S. economy has achieved a continuous growth track, while 52 percent say it has not. The Corporate Survey respondents’ main concern is the availability of skilled labor — the number-one site selection priority. Similarly, 42 percent of those surveyed by PwC who plan to increase their workforces say they are primarily looking for skilled labor and professionals/technicians.

The second-most important location factor for Area Development’s Corporate Survey respondents is highway accessibility. Considering the importance of infrastructure in the site decision, in this issue’s cover story we focus on how innovative technologies will bring the nation’s infrastructure up to speed while creating highly skilled manufacturing jobs.

If hiring does continue to pick up, wages will increase further, and perhaps spur consumers to spend more and boost economic growth. Nonetheless, Gus Faucher, senior economist at PNC Financial Services in Pittsburgh, told The New York Times, “This year is going to look a lot like the past couple of years. Growth in 2016 will be good but not great.”

We won’t know whose projections are right until all the numbers are in.

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