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Why Manufacturing Hasn’t Recovered Yet

Post: Feb. 2, 2017

Stephen Gold, the President and Chief Executive Officer of the Manufacturers Alliance for Productivity and Innovation (MAPI), has written a rundown of why America’s manufacturing sector hasn’t yet recovered from the Great Recession. He cites three main reasons:

  1. Uncertainty at home. Annual capital investment continues to lag behind the averages of the post-war era, as does R&D investment – two of the most important catalysts for innovation and growth. One reason is that business leaders have entered a prolonged period of uncertainty over many factors critical to such decisions.
  2. Stagnant economic conditions abroad. As sluggish as our own economy has been, with 1.5% GDP growth projected for 2016 and a MAPI Foundation forecast of 2.0% for 2017, we appear to be leading the stagnant pack. The World Bank estimates that global growth – including emerging markets – attained a post-recession low of 2.3% in 2016.
  3. Collapse of oil and gas prices. As high energy prices can provide a shock to the economy (remember the summer of 2008?), so can the reverse: when prices fall below a certain threshold, companies stop investing in equipment, R&D and people.

You can read his full report here.