For metal markets such as copper to improve there needs to be
stronger overall growth in the United States, according to
economist Peter Morici.
Morici said he is less
optimistic than others about how strong the U.S. and global
economies will be in the coming two years, but there is
nonetheless some slight growth on the horizon, he said at the
Metals Service Center Institutes Copper and Brass
Products Division Conference in Kohler, Wis.
He said he expects the
U.S. economy to grow more rapidly in 2014 than this
yearhe projects gross domestic product growth of about
2.3 percent compared with a projected 2 percent growth in
2013but others are more optimistic. "If theres
optimism about the economy, its good for metal prices,
but now how long can that be sustained?"
Based on historical
trends, the U.S. economy should be able to grow 5 percent year
over year despite the recession, said Morici, a professor at
the University of Marylands Robert H. Smith School of
U.S. policy is the
main culprit behind the slow growth, he said. Solutions include
curbing the federal deficit through health-care and social
security reform, restructuring banks, replacing Dodd-Frank,
reforming regulations and taxes and fixing trade issues with
China, Morici said.
The United States is
too reliant on China for trade, which is why the metals
industry has been affected by the sluggishness of that
countrys economy, he said.
However, there are
also some positive indicators for the metals industry, such as
stronger housing starts and auto sales, Morici said. "If you
build houses, you also build strip malls, which use steel,
copper, aluminum. Then you need appliances (and) fixtures, so a
robust housing market and new home construction is an important
indicator of where were going."
Morici said he expects
housing starts to grow from 780,000 starts in 2012 to 1 million
this year and 1.2 million by 2014.
The number of housing
permits grew to an annual rate of 974,000 in May, up 20 percent
from 806,000 in the same month last year (
amm.com, June 19).
Auto sales also are
expected to grow year over year because the technology in
vehicles are much better than in years past, and people will
replace cars sooner in order to drive better, high-tech
vehicles, Morici said.
U.S. vehicle sales are expected to increase from 14.4
million units in 2012 to 15.4 million units this year and 16
million units in 2014, he said.