PMMI’s 2011 Economic Outlook Up Slightly

July 18, 2011
Spurred by Revised Federal Data, PMMI Has Increased Its 2011 Economic Outlook by 7 Percentage Points

The forecast for the 2011 economy has improved slightly, but the outlook for 2012 remains largely unchanged, according to PMMI’s Third Quarter 2011 Economic Outlook, produced by The Institute for Trends Research. The report increases the outlook by 7 percentage points because of revised data from the U.S. Federal Reserve Board.

Despite the upward revision, the forecast calls for slower growth for the remainder of 2011 and early 2012. The U.S. Leading Indicator has not reached its cyclical low, but its 4.1% rate of change signals slower growth over the upcoming three to four quarters.

The report predicts an “imminent” transition to Phase C of the business cycle, and also says the rise in industrial production will slow gradually through the end of 2011 and into the first quarter of 2012. During the remainder of 2012, however, the U.S. should see a rise in production.

Total industry capacity utilization reached 77% in March, a 30-month high. Despite a slight slip in April, the trend has remained on the increase, but is still 3.9% below the historical average.

The prolonged period of low interest rates has been favorable for businesses as well as consumers, according to the Corporate Bond Prices trend. Interest rates have increased by 0.8 percentage points since their low point in 2010.

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