- NEW YORK (PRNewswire)
-- Revising its year-end economic forecast sharply upward, The Conference
Board today projected that real GDP growth will hit 5.7% next year, making
2004 the best year economically in the last 20 years.
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- The forecast, by Conference Board Chief Economist Gail
Fosler, expects worker productivity, which set a 20-year record in the
third quarter, to rise at a healthy 3.6% next year. That would follow a
gain of 4.3% this year.
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- The economic forecast is prepared for more than 2,500
corporate members of The Conference Board's global business network, based
in 66 nations.
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- KEY BAROMETERS FLASHING GROWTH
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- "Growing business spending and continued strength
in consumer spending are generating growth throughout the U.S. economy,"
says Fosler. "This burgeoning strength is reflected in The Conference
Board's widely-watched Leading Economic Indicators, the Consumer Confidence
Index and the Help-Wanted Advertising Index. While the labor market, a
critical factor in sustaining growth, is growing slowly, a pick-up in hiring
may already have begun."
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- Real consumer spending, which continues to fuel growth,
will increase at a 4.7% pace next year, up from about 3.2% this year. Another
gain of 4.3% is projected for 2005.
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- While the U.S. economy is expected to generate more than
one million new jobs next year, the unemployment rate will edge down only
slightly, averaging 5.6% in 2004.
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- The Conference Board forecast notes that as the U.S.
economy bounces back, so is Europe, although growth will be subdued compared
to most other major parts of the world. "For all the concern about
a weak dollar," says Fosler, "the dollar will be worth more than
the euro by the end of the year."
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- Real capital spending, which will rise by only 2.7% this
year, will climb 11.7% next year and another 8.6% in 2005. Pre-tax corporate
operating profits will top $1 trillion next year, up from a projected $928
billion this year. Another trillion-dollar-plus gain in profits is expected
in 2005.
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- The continued recovery in business profits, which was
a key ingredient in funding new investment (crucial in making 2004 a strong
growth year), depends on price relief. Business profits will benefit from
both improved volume and recovering profit margins in 2004, as inflation
creeps back toward 3% by the end of the year.
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- Source: Revised Conference Board Economic Forecast December
2003
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