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DAY THREE: Views of the Economy Through 2009

Posted 05-05-2009 at 10:40 PM by 94th Annual
Updated 05-05-2009 at 10:44 PM by 94th Annual
This morning’s keynote address included manufacturing and non-manufacturing economic insights from Norbert J. Ore, CPSM, C.P.M., chair of the ISM Manufacturing Business Survey Committee; and Anthony S. Nieves, C.P.M., CFPM, chair of the ISM Non-Manufacturing Business Survey Committee, and senior vice president — supply management for Hilton Hotels Corporation.

Additional economic perspectives were provided by notable economists Dr. Mickey D. levy, chief economist for Bank of America; and Sara Johnson, managing director, global macroeconomics for IHS Global Insight.

ISM Semiannual Economic Forecast
“What a difference a year makes,” said Ore, as he began Tuesday’s keynote address. Among the major points in his presentation, Ore offered the following insights for the manufacturing sector through the duration of 2009.
• Operating rate is currently 67 percent of normal capacity. The standard rate would have manufacturing running above 80 percent.
• Production capacity is expected to decrease 8.4 percent in 2009. This is a significant decline compared to what was forecast in December 2008, which was a 2.1 percent increase.
• Capital expenditures are expected to decrease 22.7 percent in 2009.
• Prices paid decreased 6.8 percent through the end of April 2009.
• Prices are expected to decrease a total of 5.3 percent for all of 2009, indicating an expected increase in prices of 1.5 percent for the remainder of the year.
• Manufacturing employment is expected to decrease 2.6 percent during the remainder of 2009.
• Manufacturing revenues are expected to decrease 14.7 percent in 2009.

Next to speak was Nieves, who focused on the economic impacts on the non-manufacturing sector. Among the major points of his presentation were the following:
• Operating rate is currently 80.1 percent of normal capacity (the lowest rate since 1998 when the non-manufacturing report was established).
• Production capacity is expected to decrease 2.6 percent in 2009.
• Capital expenditures are expected to decrease 13.5 percent in 2009.
• Prices paid decreased 1.3 percent through the end of April 2009.
• Prices are expected to increase 1.3 percent over the remainder of the year and to remain flat relative to price levels at the end of 2008.
• Non-manufacturing employment is expected to decrease 6.4 percent during the balance of 2009.
• Non-manufacturing revenues are expected to decrease 5.1 percent in 2009.
• Overall, non-manufacturing is declining in 2009.

The podium was turned over to Levy of Bank of America and Johnson of IHS Global Insight. Both revealed similar economic outlooks.

Levy’s presentation “Emerging from Deep Recession: Early Signs of Stabilization,” included the following outlook:
• The economy will begin to rebound in the second half of 2009.
• Probability of a slow or bumpy rebound is high, reflecting a number of obstacles, such as:
— Households need to raise savings and lower their debt.
— There’s uncertainty around the level of rebound in the housing market.
• Exports may lag.
• Potential long-run growth forecasts have been lowered for a few reasons:
— Unprecedented surge in government debt.
— Misallocation of national resources constrains productivity gains.
— Expected onslaught of government regulations.

Johnson then delivered her presentation, “The U.S. Economic Outlook: Is Recovery on the Horizon?” Her outlook included the following insights:
• The U.S. economy’s freefall is over.
• Recovery will begin in late 2009 or early 2010.
• Consumer spending and housing will lead the upturn.
• Imports will revive before exports.
• Business construction will be slow to recover.
• Excess capacity will keep wage and price inflation subdued for several years.
• A buyer’s market will persist well into 2010; now is the time to push back against suppliers.

The keynote was a well-rounded view of the economy that supply management professionals face for the remainder of the year. With some light at the end of the tunnel beginning in the third or fourth quarter of 2009, supply management executives must have their organizations ready when the recovery occurs.
Total Comments 2


Where can I obtain a copy of the slides used during the keynote presentations?
Posted 05-07-2009 at 02:15 PM by jpquick
The available presentation slides and handouts (if any) are available on the ISM Web site at:

The presentations are listed by date and session code (if any).
Posted 05-07-2009 at 06:08 PM by 197893

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