Manufacturing growth will continue to lead an economic recovery in the United States, predicted PNC Financial Services Group senior economist Robert Dye, in town Wednesday to deliver his forecast at Meridian Hills Country Club.
“It does look like here in 2011 the U.S. economy is turning a corner from a government-aided recovery to a self-sustaining one,” Dye said in an interview ahead of his talk, which was sponsored by the Indiana Manufacturers Association and Purdue University’s Manufacturing Extension Partnership.
Dye predicted growth of 3 percent to 3.5 percent in the gross domestic product, which is enough to fuel a slow decline in unemployment and better consumer confidence while creating a floor under housing prices.
Manufacturing has led the recovery so far, and Dye doesn’t see that changing. The earthquake in Japan might lead to “bottlenecks” in the automotive industry, he said, but it could also be an opportunity for U.S. automakers to gain market share.
Dye did have a word of caution about gas prices, which are a major factor for Indiana’s recreational vehicle industry. “We’re one geopolitical event away from $150 per barrel oil,” he said. “This remains a risk-prone situation we’re going to monitor.”
Not every sector has benefited from the global demand that has driven manufacturing growth so far. Noting that office vacancy rates are falling, Dye predicts that commercial construction will pick up late in the year, and that bodes well for steel and office-furniture makers.
PNC Financial Services Group is based in Pittsburgh.