Tom Runiewicz

US Industry Practice – Principal / Economist

December 10, 2009

Next Year’s US Manufacturing RecoveryA Consumer Perspective

National Association for Business Economics

MRT Teleconference

Copyright © 2008 IHS Global Insight. All Rights Reserved.

Global Insight’s December 2009 forecast…

• GDP growth estimated at -2.5% this year, should grow 2.2% in 2010 & 2.9% in 2011.

• Interest rates to remain flat through 2010.

• CPI: -0.3% this year, 1.7% in 2010, 2.0% in 2010.

• PPI: 6.6% this year, -6.0% in 2008, 1.9% in 2010.

• Trade weighted $ declines 3.9% in 2010, down 1.0% in 2011, down 2.9% in 2012.

• Consumer spending to fall 0.6% in 2009, up 1.8% in 2010, up 2.4% in 2011.

• Exports: -10.4% in 2009, 7.9% in 2010, 6.2% in 2011.

Copyright © 2008 IHS Global Insight. All Rights Reserved.

The stage is being set for next year’s recovery with High Tech leading the way.

U.S. Industrial Production

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

% C

han

ge

Yea

r A

go

Traditional Mfg

Total Mfg

Copyright © 2008 IHS Global Insight. All Rights Reserved.

Production will not exceed the pervious 2007 peak until 2012 or 2013.

U.S. Industrial Production

40.0

50.0

60.0

70.0

80.0

90.0

100.0

110.0

120.0

130.0

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

Ind

ex 2

002=

100

Traditional Mfg

Total Mfg

Copyright © 2008 IHS Global Insight. All Rights Reserved.

Employment should bottom in early 2010 & it takes three years top get the jobs back.

Total U.S. Employment

80

90

100

110

120

130

140

150

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

Mil

lio

ns

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

% Y

ear

Ag

o

Level (Left)

% Change (Right)

Copyright © 2008 IHS Global Insight. All Rights Reserved.

Home prices should bottom out in 2010, but should not return to their previous peak until 2016 or beyond.

U.S. Single-Family Home Prices

$0

$50

$100

$150

$200

$250

$300

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

Th

ou

san

ds

Avg Sales Price, Existing

Copyright © 2008 IHS Global Insight. All Rights Reserved.

Consumer spending should begin to slowly recover in 2010 as employment increases.

U.S. Consumer Spending for Goods

-8.0

-4.0

0.0

4.0

8.0

12.0

16.0

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

% C

han

ge

Yea

r A

go

Nondurables

Durables

Copyright © 2008 IHS Global Insight. All Rights Reserved.

Over the next few years auto manufacturers should see a healthy recovery from a growth perspective, but…

U.S. Auto Industry

-30.0

-20.0

-10.0

0.0

10.0

20.0

30.0

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

% C

han

ge

Yea

r A

go

Production

Sales Domestic Vehicles

Copyright © 2008 IHS Global Insight. All Rights Reserved.

…from a level perspective the numbers never truly come back.

Sales New Domestic Lt Vehicles

6.00

7.00

8.00

9.00

10.00

11.00

12.00

13.00

14.00

15.00

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

Mil

lio

n U

nit

s

Copyright © 2008 IHS Global Insight. All Rights Reserved.

By 2012 housing is still 30% below its peak in 2005.

U.S. Fixed Investment Residential Structures

100.0

200.0

300.0

400.0

500.0

600.0

700.0

800.0

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

Bil

lio

n 2

005

$

Copyright © 2008 IHS Global Insight. All Rights Reserved.

Housing-oriented industries will not recover until a stronger

increase in employment in 2011.

U.S. Industrial Production Housing-Oriented Industries

-30.0

-25.0

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

TextileFurnishings

Carpets &Rugs

WoodProducts

Appliances Furniture

% C

han

ge

Yea

r A

go

2009 2010 2011

Copyright © 2008 IHS Global Insight. All Rights Reserved.

Other consumer related industries should see some growth in 2010 and stronger increases in 2011.

U.S. Industrial Production Other Consumer Products

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

ProcessedFoods

Beverages &Tobacco

Apparel Pharmaceuticals Tires

% C

han

ge

Yea

r A

go

2009 2010 2011

Copyright © 2008 IHS Global Insight. All Rights Reserved.

From an industrial production point of view, the recovery should remain steady through 2010, but its full strength will not be felt until 2011 or

2012.

US Industrial Production

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

% C

han

ge

Fro

m Y

ear

Ag

o

Consumer Goods

Materials

Investment Items

Thank youThank you

For more Information Visit:

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