View Full Version : US Economy to slow down AGAIN



Patrick
12-30-2004, 07:13 PM
Funny thing...I never really noticed that the economy ever picked back up. It took a year for my fiancee to find a job, and she finally had to accept a run of the mill $10 an hour receptionist job. Funny thing is she's al ultrasound tech, in the ever growing medical field, and still can't find any job openings. There are plenty in Texas though. It's just an Oklahoma problem.

Anyways, with the value of the dollar dropping and interest rates going up, it's probably gonig to be a rough 2005.

Guess John Kerry was right......"More of the same" lol! I had to throw that in. :)

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Economists see banner year
By Martin Crutsinger
AP Economics Writer

WASHINGTON - Despite soaring oil prices and a slumping dollar, the United States enjoyed a banner year in terms of economic growth in 2004, but the new year is likely to see a significant slowdown, private economists say.
Analysts believe that rising interest rates, the lack of new tax cuts and the lingering effects of higher energy bills will combine to slow growth next year.

"The performance of the U.S. economy in 2005 will be good but not great, at least in comparison to 2004," said Nariman Behravesh, chief economist at Global Insight, a private forecasting firm in Lexington, Mass.

But what a year 2004 turned out to be in terms of overall growth rates.

Many analysts believe that the gross domestic product -- the total output of goods and services -- grew by 4.5 percent for all of 2004. That would match the boom years of 1999 and 1997 and would be the fastest pace in two decades.

But even with sizzling GDP growth, consumer surveys indicate that many Americans did not feel particularly prosperous. Analysts attribute that to a job market that still has not recovered all the jobs lost since the start of the 2001 recession as businesses pushed hard to get more output from existing employees rather than hiring new ones. Economists think this boom in productivity may be coming to an end as rising demand is forcing companies to hire more employees.

The latest survey of top economists done by the National Association for Business Economics is forecasting that 2.2 million jobs will be created in the new year, a slight improvement from 2004 with both years up significantly from the 61,000 jobs lost for all of 2003.

Analysts believe the unemployment rate of 5.4 percent will fall gradually to just above 5 percent by the end of 2005. One reason they are not predicting a more dramatic decline is their belief that people who had given up looking for work will re-enter the labor market as they see hiring pick up. A falling unemployment rate and growing jobs should translate into at least slightly stronger wage gains, many analysts believe.

"This could be the best year for the American worker since 2000 as the job market tightens up," said Mark Zandi, chief economist at Economy.com. "For the first time in five years, workers should be able to look forward to bigger wage increases."

The overall economy should grow next year by about 3.5 percent, according to Global Insight and other forecasting firms. While that is a full percentage point less than the expected 2004 performance, analysts said it still will be a decent year, especially if their forecasts for solid employment growth turn out to be correct. The additional workers will boost income growth and support continued strong consumer spending.

The consumer, who accounts for two-thirds of total economic activity, has been the standout performer during the first three years of the current economic expansion, as President Bush's successive rounds of tax cuts and low interest rates from the Federal Reserve bolstered spending even as job growth lagged.

But for 2005, the impact of the tax cuts will be wearing off, and the Federal Reserve since mid-2004 gradually has been raising interest rates to make sure inflation does not get out of control.

Another factor cutting into growth is the cumulative impact of higher energy costs. Oil prices surged for much of 2004, hitting a record high of $55 per barrel in October. Oil prices have fallen by about $10 per barrel since then and many analysts think they will retreat to around $40 per barrel by next December.

If energy behaves, inflation is expected to moderate from an expected increase of 3.3 percent in 2004 down to 2.1 percent next year, according to a year-end survey of top economists by the Bond Market Association.

However, the forecast for moderating inflation is built on an assumption that there will not be a major terrorist-related oil supply disruption in the Middle East, a big unknown.

Another wild card is what will happen to the dollar, which has hit record lows against the euro, the common currency of 12 European countries, and has fallen against the Japanese yen and other major currencies.

So far that decline has been gradual and welcomed by economists, who say it will help ease America's record trade deficits by making U.S. exports cheaper and more competitive on foreign markets. But if the dollar suddenly started plunging in value against other currencies, that could spook foreign investors in U.S. stocks and bonds into stampeding for the exits, sending stock prices into free-fall and interest rates soaring.

However, if the dollar and oil prices behave as expected, economists said the country should enjoy another solid year of growth with stronger employment gains helping to bolster consumer confidence.

"Job security is the main issue for most people," said David Wyss, chief economist at Standard & Poor's in New York. "If we continue to see job growth of 175,000 or more per month and the unemployment rate keeps ticking down, then people should be happy."

El Gato Pollo Loco!!!
12-30-2004, 09:06 PM
... It took a year for my fiancee to find a job, and she finally had to accept a run of the mill $10 an hour receptionist job..."Run of the mill" $10/hr receptoinist job? http://www.planetsmilies.com/smilies/confused/1/confused71.gif

Patrick
12-30-2004, 11:06 PM
I know that's pretty good for a receptionist, but that's run of the mill considering an ultrasound job pays anywhere from $20-30 an hour. That's the problem with Oklahoma (as Midtowner already pointed out)...there are plenty of $10 an hour jobs, but few higher paying jobs. Unfortunately, many college graduates (like my fiancee) are being forced to either accept lower paying jobs and stay here, or move elsewhere.

metro
12-31-2004, 11:38 AM
There was also an article in The WSJ and the Oklahoman lately showing how Oklahoma economy was actually growing at a rate much faster than the national average. I want to say almost 4 times

soonerguru
03-24-2005, 07:15 PM
The economy may be growing, but real wages are declining in this country. Just wait, now with the absurd energy costs we're seeing inflation. Get ready for stagflation.

We're turning into a country of menial wage slaves. People who think they have it made right now are going to choke on the high interest rates of the future, and trust me, they will happen.

People are living beyond their means, big time. It will come back and bite them in the ass.

Midtowner
03-24-2005, 07:19 PM
There was also an article in The WSJ and the Oklahoman lately showing how Oklahoma economy was actually growing at a rate much faster than the national average. I want to say almost 4 times

What those articles miss is the fact that we can still grow at a rate almost 4 times that of everyone else, and even after a long period of time passes, we'll still be behind. We're a long ways back in this race.