WASHINGTON - The National Association of Manufacturers (NAM) has released its annual economic forecast, which projects that gross domestic product (GDP) will increase a healthy 4 percent in 2004.

"After edging up only 1.4 percent in 2003, we expect manufacturing production will increase by over 6 percent in 2004," stated Jerry Jasinowski, president of NAM, "the fastest pace since 1999. Manufacturing will not be a drag on the economy in 2004."

Since the 2001 recession, manufacturing output has edged up only 3.2 percent, which is extremely weak by historical standards. "We now see a confluence of positive indicators," Jasinowski said. "Consumer confidence is strong, inventories are at their lowest level in three decades, interest rates are low, corporate profits are rebounding, the dollar has moved back toward historic levels against many major currencies, exports are rising, and the Bush administration's tax cuts are kicking in at just the right time."

Jasinowski said the most significant aspect of the emerging recovery is that it is not being driven mainly by consumer spending. "While remaining strong, consumer spending is not expected to accelerate. Instead, the biggest economic improvement will be in acceleration in business spending on equipment, from 9.5 percent in 2003 to 13.4 percent in 2004. As a result, manufacturing output will grow faster than the overall economy for the first time in four years, 6 percent for manufacturing compared to a little over 4 percent for the overall economy."

Publication date: 02/09/2004