Manufacturing Solutions: Wait ‘Til Next Year
As 2010 comes to a close, Americans are still struggling with a high unemployment rate, low consumer confidence, declining house prices and an uncomfortably high level of uncertainty about the future. However to be fair, the manufacturing sector did improve when compared with last year, especially the plastics industry. Total output of plastics products expanded by 7 percent in 2010, and shipments of new plastics machinery jumped by 50 percent through the first three quarters. But we are still far below the output levels we enjoyed prior to the recession, and there is a definite feeling that market demand for molded products is far from hitting on all cylinders.
The next 12 months will certainly be a challenge, but if moldmakers and molders can hold on until this time next year, then the economic fundamentals and market prospects will improve substantially in 2012 and beyond. Total real GDP growth will be 3 percent in 2011, with slower gains at the beginning and then the expansion will accelerate during the second half. In 2012, real GDP growth will be closer to 5 percent.
The good news is that we will not have to wait a whole year before we know if this forecast is accurate. The key to righting the U.S. economy is house prices and activity levels in residential construction and real estate. The failure of the housing market is what got us into this mess, and the correction will be the signal that the economy is back on track. Data on foreclosure sales, housing prices and construction activity are compiled and reported monthly, so if trends in these data start to rise then we should take heart.