US Industry Feels Economic Squeeze

[May 22, 2008.]

 

During April of this year, many automotive manufacturers had to decrease their rates of production as a result of the country's economic slowdown. As a consequence, the total industrial production in America dropped by 0.7% for the month of April alone, after rising by 0.2% for the month of March. The production of cars and car parts lowered by 8.2% during the month of April. The automotive industry is now the slowest it has been since its output plummeted by 12.7% in 1998, 10 years ago.

This decrease in industrial production is higher than experts had predicted, causing many onlookers to fear for the American economy—at present, still the largest in the world. Experts and economic analysts had stated that production in the US industrial sector (including factories, mining, and electricity and water providers) would only decrease by roughly 0.3% in April.

However, the demand for cars and car products, especially new cars, has decreased more dramatically than expected. Consumers have been spending less because of the credit crisis, and the automotive industry has suffered.  A major strike at General Motors, one of America's Big Three automobile manufacturers, has compounded the industry's difficulties.

According to the economic consultant Joel Naroff, the American industrial sector is very heavily dependent on automobile production. Consequently, explains Naroff, “a rapidly shrinking vehicle sector led the manufacturing sector downward, showing that there is a significant consumer slowdown.”  The output of other industrial products, such as electronics, metal, and furniture, has also decreased during the month of April.

The problem is that America is still struggling with trying to get out of its recent economic recession. Although consumers are starting to spend a little more, the issues that brought about the recession still exist. The cost of food and oil is still very high. Thus, American shoppers as well as business owners are still trying to act cautiously.