There are a few signs that the U.S. economy is strengthening. Increased consumer spending, a booming stock market, and rising home valuations all signal this.
Sujit CanagaRetna, a fiscal analyst for the Lexington, Ky.-based Council of State Governments, said improvements in gross domestic product (GDP), coupled with shrinking unemployment numbers, are among the signs the economy is on an upswing. "Improving export figures, a booming energy market driven by natural gas extractions, and a recovering manufacturing sector are some of the positive elements in the U.S. economy that offer room for cautious optimism," he added.
As the economy strengthens, governments will loosen their purse strings. In 2014, government purchases of goods and services will reach $3.09 trillion, up from $3.02 trillion in 2013, according to Lexington, Mass.-based economic forecaster IHS Global Insight. For 2013, federal government purchases of goods and services will total $1.17 trillion, while state and local government purchases will reach $1.86 trillion. By 2018, government purchases of goods and services will rebound to $3.35 trillion, IHS predicts. Of that amount, state and local purchases will total about $2.13 trillion.
Manufacturers are getting a share of the government market. Late last month,Manchester, N.H.-based Granite State Manufacturing (GSM) announced that it has delivered the world's first commercially available tamperproof intermodal cargo container under its contract with the U.S. Navy. The container is capable of providing absolute cargo security for high-value freight.
But Defense Department buyers have dialed back a little, said Glenn Lawton, GSM president. "As a key subcontractor to government primes including General Dynamics, Northrop Grumman, and Lockheed Martin, GSM has seen a definite slowdown in defense programs across the board," he said. "Budget uncertainty, both in the time period preceding sequestration and continuing today, has delayed awards of new contracts and existing program continuations alike.
"An unintended consequence of sequestration is that it will end up costing the government more, as many aspects of manufacturing, as well as government contracts management, government auditing, and government source inspection must be inefficiently duplicated when a three-year program is split into three individual procurements."
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