Exports of American goods will increase even more sharply than they did during last year's dramatic surge and will combine with continued business investment to provide "our best insurance against a recession in 1988," the National Assn. of Manufacturers predicted Thursday in an unexpectedly upbeat forecast.
Despite the October stock market crash and an expected slowdown in spending by consumers, much slack will be taken up by a continuing rise in net exports that could expand the gross national product by as much as $40 billion in inflation-adjusted 1982 dollars, NAM officials said at a press briefing.
That adds up to about half of the U.S. economy's expected growth of barely 2% this year and would provide a far brighter economic picture than the recession many feared in the wake of the Wall Street debacle Oct. 19.
At the same time, the manufacturing sector will continue to invest in its own future through continued strong spending and, down the road, plans to begin buying more parts and components from U.S. sources--thereby giving another boost to the problematic American trade balance, said Jerry J. Jasinowski, chief economist for the NAM.
The nation is still running a huge trade deficit that, in goods alone, could run as high as $170 billion once all the numbers for 1987 are compiled.
Jasinowski spoke on the eve of a Commerce Department preliminary report on November's trade balance, which financial markets are awaiting nervously in the hopes that it will show improvement on October's record $17.6-billion deficit. He compiled the NAM forecast from a combination of current economic statistics and predictions based on the near-term investment and production plans of a cross-section of manufacturing industries.
He cautioned that today's trade report likely will show a deficit of about $15 billion in large part because of seasonal factors for which the Commerce Department does not correct.
But Jasinowski cautioned that probable declines in the value of the dollar during the first half of this year, together with other seasonal factors, could produce wide fluctuations in the often-unreliable monthly trade reports until late spring or even summer.
On the other hand, he said, "we could see spectacularly good trade numbers for the rest of 1988," thanks primarily to a stabilized dollar that could possibly settle 5% to 7% below its current depressed levels.
Although trade statistics stated in dollar terms have provided generally dismal news in recent years, export volume began a turnaround in late 1986 and improved by an estimated $12.3 billion in 1987.
In addition, manufacturers who had been shrinking capacity, cutting jobs and restructuring their manufacturing base last year began to reap the benefits of several lean years that combined cost-cutting with substantial capital spending on manufacturing equipment.
One result, Jasinowski's report said, was that manufacturing production increased a strong 4.2% in 1987, compared to 0.5% growth in 1986, and created hundreds of thousands of factory jobs, helping to push U.S. unemployment below 6% for the first time in a decade. Manufactured exports during the year grew by 18% in uninflated dollars and, during the same period, goods imports increased by only 4.7%.