Purchasing Forecasts

By Staff -- Purchasing, 4/5/2001

PURCHASING cuts forecast...

Rapid deterioration of economic conditions has forced P URCHASING to chop a point from its economic growth forecast for 2001. In January, PURCHASING 's real GDP growth forecast was 3%. The revised 2.1% growth outlook assumes an optimistic 1.5% annualized growth rate for quarter one (many forecasters are now suggesting that growth may be nonexistent in Q1); 2%-2.5% growth rates for the middle two quarters, and a 3.6% lift in the fourth. Long look: If the rally arrives on time, '02 should see at least 2.5%-3% growth.

...as wealth suffers...

Consumer spending will grow just 2.3% in 2001, according to P URCHASING 's revised forecast. That represents a three-point decline from the spending growth rates logged in both 1999 and 2000 and reflects a deteriorating consumer wealth picture. Bearish growls from Wall Street will put a crimp in outlays for big-ticket items like homes, cars and appliances. Tech gadgets may suffer as well. But Fed interest rate cuts-plus a probable tax cut-should be in time to prevent spending from turning negative this year. Long look: 3% or better growth for 2002.

...and costs sack biz outlays

Fourth quarter 2000 saw the first quarterly decline in business investment since the recession in 1991, a worrisome development since spending on pro-ductivity-enhancing equipment has been a stalwart contributor to the long economic recovery. But winter is almost over, and with it will go-at least in part-the soaring energy costs that are preventing businesses from investing in their futures. P URCHASING predicts quarterly growth rates in the 6%-9% range this year, which will leave total growth at plus 6%-7%. Next year: +7%.