The 1997 economy -- as good or better than "the good old days"
What an extraordinary year 1997 was for the U.S. economy. A year ago, the "Blue Chip" consensus panel forecast called for GDP to grow only 2.2% during 1997 (we were marginally more optimistic, looking for 2.3% growth).
By Staff
What an extraordinary year 1997 was for the U.S. economy. A year ago, the "Blue Chip" consensus panel forecast called for GDP to grow only 2.2% during 1997 (we were marginally more optimistic, looking for 2.3% growth). It now appears that the year's gain in real GDP totaled 3.7%.
Even the most bullish of the 50+ forecasters in the consensus panel were expecting economic growth to just reach 3%. At the same time, most forecasters overestimated the degree to which inflation would re-emerge -- and were surprised by the low level of producer and consumer price inflation. Many forecasters did, however, correctly anticipate incipient wage inflation pressures.
Who would have believed that after more than 7 yr of uninterrupted economic expansion, we'd get growth that exceeded even 1994's gain, that inflation would remain under control, and that the unemployment rate would be stuck in the -5% range?
No, we don't think that history will repeat itself in 1998. "Asian Contagion" seems sure to sap the U.S. economy of some of its vigor. We're looking for a pronounced slowdown in economic growth during 1998. GDP will rise by an inflation-adjusted 2.3% this year, down from the heady 3.7% gain of 1997. Interest rates should be somewhat higher in 1998, as the Federal Reserve Board pursues a marginally tighter monetary policy.
Three major trends bear watching this year, and all will have a moderating influence on the economy's growth potential. First, business investment spending will slow. Second, consumers will continue to bear a high level of debt, particularly installment (credit card) debt. And third, low levels of unemployment and the resulting increased wage demands will cause an uptick in inflation. None of these factors alone is significant enough to cause the U.S. economy to stall out in 1998, but we'll be watching developments with a wary eye.
Economic expansion will continue into 1998
(Annual change, %, real GDP)*
1997 1998
Total 3.7 2.3
Consumer spending 3.2 2.5
Durables 5.2 4.5
Nondurables 2.1 1.8
Services 3.4 2.4
Business investment 10.3 6.4
Structures 4.5 3.8
Equipment 12.4 7.1
Exports 12.5 8.3
Imports 14.2 7.2
Government spending 0.9 1
*1997 estimated based on three quarters of data; 1998 forecasted by Reed Elsevier Business Economics
Case Study Database
Get more exposure for your case study by uploading it to the Plant Engineering case study database, where end-users can identify relevant solutions and explore what the experts are doing to effectively implement a variety of technology and productivity related projects.
These case studies provide examples of how knowledgeable solution providers have used technology, processes and people to create effective and successful implementations in real-world situations. Case studies can be completed by filling out a simple online form where you can outline the project title, abstract, and full story in 1500 words or less; upload photos, videos and a logo.
Click here to visit the Case Study Database and upload your case study.
2012 Salary Survey
In a year when manufacturing continued to lead the economic rebound, it makes sense that plant manager bonuses rebounded. Plant Engineering’s annual Salary Survey shows both wages and bonuses rose in 2012 after a retreat the year before.
Average salary across all job titles for plant floor management rose 3.5% to $95,446, and bonus compensation jumped to $15,162, a 4.2% increase from the 2010 level and double the 2011 total, which showed a sharp drop in bonus.