A Way Out of the Financial Morass
A substantial economic rebound, particularly in U. S. manufacturing, will occur in 2009 only if four factors trend in a positive way, says Chris Kuehl, economic analyst for the Fabricators & Manufacturers Association, International (FMA).
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A substantial economic rebound, particularly in U.S. manufacturing, will occur in 2009 only if four factors trend in a positive way, says Chris Kuehl, economic analyst for the Fabricators & Manufacturers Association, International (FMA).
One could “go slightly balmy” evaluating all the factors that come into play when predicting what must take place to spur growth, but developments in the financial sector, consumer confidence, commodity prices and exports stand out as the best barometers, Mr. Kuehl says.
While stabilizing the financial sector has been the goal of the Federal Reserve and Treasury for months, there has been scant progress. Because these institutions’ efforts are based on monetary policy, they may take a while to bear fruit, Mr. Kuehl says. However, he predicts that lower interest rates and extra liquidity should begin to make a difference in the first half of 2009.
Mr. Kuehl acknowledges that it is hard to predict whether consumer confidence will recover anytime soon, but asserts that prices and jobs play leading roles. The recent tumble of commodity prices to record lows is a positive. If this is combined with improved job prospects, consumer mood will quickly shift, he explains.
In fact, Mr. Kuehl says low commodity prices are “currently the best news available for the manufacturing community, as prices for every industrial input have fallen for the past few months.”
Regaining the export market’s lost luster requires more demand, which could come from India and other Asian states if they succeed at stimulating their economies, Mr. Kuehl says. Additionally, he predicts that the current strength of the dollar, which has gained recently against the Euro, is short-lived, which will promote U.S. trade.
“Although in general, it is likely that the first quarter of 2009 will be in negative territory and the second quarter is something of a toss-up, there is good news soon thereafter,” Mr. Kuehl says. “There is a consensus that the third quarter will show some significant improvement, and the fourth quarter is also likely to end up positive.”
For more information, visit: The Fabricators & Manufacturers Association, International (FMA), www.fmanet.org.
