Manufacturing, A Ring-Leader For The US Economic Recovery, May Be Stalling Out

Wednesday, August 01, 2012 07:58
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Manufacturing, A Ring-Leader For The US Economic Recovery, May Be Stalling Out

Tags: Economic Outlook | economy | Federal Reserve

Analysts predict that manufacturing—one of the bright spots of the economic recovery—likely stalled as a result of decreased spending. This will be the first time in three years that the manufacturing sector will have made no progress.

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The Institute for Supply Management (ISM) reported a rise to 50.2 in July from 49.7 in June. Anything above 50 is considered positive. The stalemate in Congress about the fiscal cliff is being cited as the culprit. Companies are reluctant to continue spending based on the possibility that current tax laws will be allowed to expire, increasing tax rates and implementing drastic spending cuts.
 
Employment uncertainty and economic uncertainty are causing consumers to stuff more money in savings instead of spending it to spur economic growth.
 
The Fed will conclude its two-day meeting August 1 in which it is focused on whether to add more stimulus to the economy. Manufacturing makes up 12% of the economy and has been one of the leaders since the economy began expanding in June of 2009.

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