Manufacturers' global push -
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Published on: 8/3/2001
Last Visited: 8/3/2001
Robert Stauffer , associate professor of economics in the Department of Business and Economics at Roanoke College in Salem , says Federal Reserve Chairman Alan Greenspan's six interest rate cuts have not produced any apparent snapback in the economy and that the long-term forecast for manufacturing is dim.
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We are looking for a slow economy for the rest of the year and we may be a little optimistic about the effect of the Fed's interest rate cuts , Stauffer says.There was an idea that we might get back to normal here pretty soon but that may not happen.Even the housing market in Virginia seems to be leveling off.Virginia's overall economy , however , is no longer driven by manufacturing.Of the state's 3.5 million jobs , about 400 , 000 are in manufacturing..
Stauffer says that the state is predicting a decline in manufacturing jobs even after the present slowdown ends.It is clear that we are not in a recession , but the fact that growth has slowed so much makes it feel like we are in a recession.Economic performance was so good last year , about a 5 percent annual rate nationally , that we can really feel the change to a one-half percent growth rate , Stauffer says.We don't know what will happen over the next 12 months.Normally a slowdown lasts about a year.The data that will tell us when it has ended is about six months behind , a condition we call the 'recognition lag.'.
Inflation , which could dramatically increase the difficulty of the manufacturing sector's condition , is maintaining a 2.5 percent to 3 percent rate , Stauffer says , and is not accelerating.
Stauffer's greatest concern today is the miserable growth rate in productivity.The productivity rate is a measure of efficiency and helps control labor costs.It fell apart on us the first quarter and we see business cutting back production faster than it is laying off workers.That's troubling.
We grew so fast for so long but we know demand simply can't remain at that level forever.
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You don't have to buy a new one , Stauffer says.
Furniture , apparel and textiles , long the Blue Ridge Region's most prolific manufacturing industries , are very sensitive to foreign competition , Stauffer says.Basic structural problems like foreign price competition will make it hard for manufacturing to recover , but it will be even more difficult for steel.It is a different situation in steel , which is very , very competitive , Stauffer says.In steel , foreign competition is a paramount concern..