Computers to Lead Growth, Forecast Says
Vigorous demand for computers and other high-tech goods should keep the U.S. economy growing next year despite consumer fatigue and a deteriorating trade balance, the government forecast Friday.
In addition to computers, hot industries for 1998 are likely to include aerospace, dental equipment and management consulting, the Commerce Department said in a revival of an annual publication discontinued four years ago.
Businesses projected to shrink in the department’s “U.S. Industry & Trade Outlook ‘98” include shipbuilding, printing services, footwear and jewelry.
The report evaluates 350 business sectors--both in manufacturing and services. All major services and more than 80% of manufacturing industries are projected to grow through next year and beyond.
Overall, the department forecast an inflation-adjusted growth rate in manufacturers’ shipments of 5.5% annually this year and next, up from 3.9% last year and 4.4% in 1995. A comparable aggregate figure wasn’t available for services.
Computer equipment is leading the way, with 29.6% growth projected annually this year and next.
“The importance of this industry to the economy cannot be overstated,” said Jonathan C. Menes, director of the department’s Office of Trade and Economic Analysis.
“If computers are excluded, the total of all manufacturing output . . . would be about 3% annually for 1997 and 1998 instead of the 5.5% growth,” he said.
The Commerce Department issued annual industrial outlook reports from 1959 through 1994, before suspending publication because of budget cuts. It hired McGraw-Hill Cos. to prepare much of this year’s report.
With strong orders for commercial airliners, the aerospace industry is projected to increase shipments by 17.4% a year in 1997 and 1998. Dental equipment should increase 10.5%, a result of the aging of the baby boom generation, and radio and television equipment is expected to rise 10%.
More traditional sectors of the economy are expected to show only modest growth compared with high-tech industries.
Motor vehicles and parts shipments should increase 1.8% in 1997 and 1998. The slower growth of the driving-age population is cutting into sales, but the average cost per vehicle is rising as older drivers opt for luxury vehicles, especially larger sport-utility vehicles.
Housing starts are slowing, so growth in consumer durable goods--from rugs to washing machines--should average only 1.3% this year and next.
Some industries face not only slow growth but also contraction. Shipbuilding should fall 8.5% this year and next, a victim of reduced defense spending. Such printing services as typesetting, platemaking and production of color separations should decrease 6.5% as computerization transforms the industry.
Other declines are expected in industries suffering from competition from imports: handbags and purses, down 6.1% this year and next; footwear, down 2.1%; and jewelry, down 2%.
Among services, a range of computer-related services such as data processing are all projected to show better than 10% growth in receipts, as are professional services such as management consulting, public relations and accounting.
Travel spending should show a healthy gain of 7.9% this year and next, a reflection that many households have purchased the big-ticket goods they want during the nearly seven years of economic expansion and are spending disposable income on vacations.
Growth in health-care services, meanwhile, has tapered off from double-digit increases in the early 1990s. This sector is projected to rise 5.6% this year and 5.9% in 1998. Still, U.S. health spending, forecast at $1.16 trillion next year, remains 13.5% of total economic output, the highest of any industrialized nation.
