The hard hit U.S. industrial sector, which went into recession long before the rest of the economy, is unlikely to rebound quickly or strongly according to an economic forecast released by U.S. manufacturers.
The manufacturing sector went into recession more than one year ago and the downturn has eliminated 1.3 million jobs. U.S. industrial output has declined for 12 consecutive months and is down 7 percent this year.
National Association of Manufacturers President Jerry Jasinowksi says he believes the worst of the recession may now have passed, but he doubts the recovery will be strong.
What is needed, he says, is economic stimulus in the form of tax cuts and government spending. He supports President Bush's plan. Mr. Jasinowski said, "This stimulus package, which we welcome, we believe will add at least 200,000 jobs in 2002 and 400,000 by the end of 2003.
Mr. Jasinowski blames rising interest rates, rising oil prices, and a strong dollar in 1999 and 2000 for pushing the industrial sector into recession. Except for the strong dollar, those factors have been reversed.
David Huether, chief economist for the manufacturers association, says the current recession for industries like steel and autos is likely to last longer than even the deep recession of 1982. "In 1982," he said, "the manufacturing sector, in terms of output, recovered nine months after the recession was over. Currently we project that it is going to take more than two years for manufacturing output to reach the level it had before it started into recession back in September."
Many analysts expect the current recession to end during the first three-months of the new year.
The U.S. industrial sector has been under pressure since at least 1998 when the Asian financial crisis prompted widespread currency devaluations that in turn led to a large inflow of lower-priced Asian products into the U.S. market. The manufacturers regard the dollar as much too strong and would like to see it decline against the yen and the euro.