The May 2007 Economic Outlook from the National Association of Manufacturers (NAM) points to an economy stuck in low gear that will accelerate only slightly in the second half of the year.
"An improved trade picture and positive consumer spending will continue to be offset by a downturn in housing, pullbacks in inventories, and sluggish business investment, notably in industrial equipment," said David Huether, the NAM's chief economist.
According to NAM's latest Outlook, the economy is projected to grow 2.3 percent in the second quarter before accelerating to 2.7 and 3.2 percent in the third and fourth quarters, respectively. Overall economic growth is expected to by 2.4 percent for the year, with manufacturing output to grow by 2.2 percent, its slowest pace since 2003.
"The ongoing downturn in housing will significantly impact some manufacturing sectors including wood products, nonmetallic minerals, furniture, and textile products," Huether explained. Each of these sectors has experienced declines for the last three quarters, something that Huether expects to continue. The impact of housing will also be felt on the job market, where 140,000 will be lost in construction and 100,000 in manufacturing this year, according to the report.