NEW YORK, Dec. 11 /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.
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.
The economic forecast is prepared for more than 2,500 corporate members of
The Conference Board's global business network, based in 66 nations.
KEY BAROMETERS FLASHING GROWTH
"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."
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.
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.
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."
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.
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.
Source: Revised Conference Board Economic Forecast
December 2003
