The subprime mortgage crisis that has resulted in a near
meltdown of the financial system, a decline in consumer
confidence and spending, increasing unemployment, and
near-bankruptcy for the nation’s largest manufacturers —
the U.S. auto industry — has pushed the U.S. economy into
a recession that may prove to be more severe and lengthy
than previously assessed by the economic pundits. The
National Bureau of Economic Research has, in fact, just
announced that the recession officially began in December
Figure 1
Current Operations
MANUFACTURING
• Food/Beverages
• Apparel
• Wood Products/Furniture
• Paper/Printing
• Chemicals
• Plastics & Rubber
• Primary Metals
• Fabricated Metals
• Machinery
• Computers/Peripheral Products
• Electrical Eqpmt. & Components
• Transp. Eqpmt. (incl. Automotive)
• Medical & Scientific Instr.
OTHER
• Warehouse/Distribution
• Financial Services/Ins.
• Information Technology
• Other
8%
1%
6%
4%
2%
7%
2%
14%
2%
3%
4%
8%
3%
14%
3%
3%
16%
2007. This slowdown in industrial activity — which was
actually predicted by the respondents to our 2007 Corporate Survey, although to a lesser degree — is reflected in
U.S. GDP contracting by 0.5 percent in the third quarter of
this year. Some analysts are already predicting it will shrink
by another 1 or even 2 percent in the September-December
period, once the numbers are finally crunched.
According to the third quarter edition of Pricewater-houseCoopers Manufacturing Barometer, two-thirds of
U.S.-based industrial manufacturers are, in fact, pessimistic
about the U.S. economy over the coming year. They are
scaling back growth projections for their companies’ revenue, estimating a 2. 8 percent average revenue growth rate
in the third quarter — down from the 3. 7 percent revenue
growth rate predicted the previous quarter.
A report by the Manufacturers Alliance/MAPI piles on
more bad news. That group predicts growth in manufacturing production will decline by 1. 4 percent this year, following low growth of 1. 7 percent in 2007. This will be followed by a steep 4. 2 percent drop in growth in 2009, as
companies scale back. U.S. demand for goods is down as
consumers’ wealth has decreased due to declining home
values and shrinking nest eggs. And many who still have
jobs are not sure for how long, with companies announcing plant closures and layoffs almost daily. In fact, U.S.
demand posted its first annual contraction in 17 years —
Respondent’s title:
Figure 2
Chairman, President, Partner,
CEO, or Owner — 45%
V.P., Treasurer, Secretary, or
Other Corporate Officer — 29%
Real Estate Mgr./Dir.;
Facility Mgr./Dir.;
Development Mgr./Dir.;
V.P. Real Estate — 18%
Corporate Manager — 8%
WWW.AREADEVELOPMENT.COM
2008
