NAM Sees ‘Ugly’ Recovery in 2002

An “ugly, U-shaped” recovery from the current recession was predicted on Wednesday by Jerry Jasinowski, president of the National Association of Manufacturers.

In a press release, Jasinowski said the United States is at the bottom of the business cycle and the association anticipates sluggish recovery in 2002 without significant growth in investment and exports. Jasinowski called the outlook “a tale of the good, the bad and the ugly.”

He said the good components of the U.S. economy are interest rates that have fallen four and three-quarter percentage points this year, declining energy prices and reduced inventories.

The bad components, he said, are a dismal business climate, a credit crunch affecting a large segment of the business community and the loss of 1.3 million manufacturing jobs, the worst in the last 20 years.

As for the ugly, he said, exports are on pace to have their worst performance in more than 40 years and business investment has now declined four quarters in a row.

Jasinowski called declining business investment a “grim trend we expect to continue for at least six months more.”

The NAM release said the economy will grow by a modest 1.7% in the first quarter of 2002, followed by slightly stronger 2.4% growth in the second quarter. Growth in the second half would be 3.5%. The initial growth would come from government spending and business inventory correction.

NAM Chairman Don Wainwright called for passage of stimulus legislation, which has been stalled in the Senate, as Democrats and Republicans wrangle over a variety of issues.

“To get this engine working again,” he said, “we need to encourage more capital formation and investment.”

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