A mild economic sprain

January 19, 2001

The U

The U.S. economy might have taken a stumble, but it's not going to hit the pavement.

According to Dr. Lloyd Atkinson, former deputy assistant at the U.S. Congressional Budget Office in Washington, D.C., the sudden slowdown on Wall Street is "not going to be deep." Atkinson presented his forecast at the AED Annual Meeting and Condex in Las Vegas earlier this week.

"There will be no repeat of the last recession (in 1990)," he told attendees. "There will be a series of interest rate cuts, especially in the first half of this year, but this economic slowdown is not going to be long-lived."

Fueling the optimism is a "different" economy then in years past, one that is influenced by the techonology revolution and the Federal Reserve Board's zero tolerance for inflation.

"The two together create an economy moving forward," Atkinson said.

The boom in techonology has led to productivity growth, where the U.S. has exceeded 4% annually over the last eight years. Atkinson sees a consistent growth of over 3% in 2001.

"The techonolgy revolution has effected management inventories. The inventory-to-sales ratios have fallen significantly. A small inventory build-up allows for a smoother adjustment during hard times," said Atkinson.

The Construction Industry Manufacturers Association's latest quarterly construction equipment shipments index shows a slowing rate of overall industry growth.

Shipments of construction equipment for the third quarter 2000 were 17.7 points higher than the same quarter last year, but increased just 4.4 points when compared to the previous quarter.

Looking at the annual percent changes in the CIMA index, business for March 2000 was up about 35% over the previous year. By June, the rate had dropped to 24%, and the annual percent change for September was just over 11%.