The Nation’s Economic Outlook

THE NATION’S ECONOMIC OUTLOOK By Jack Malehorn Anemic Growth expected Amidst Few positive siGns N N o recession but few signs of strength highlight the Consensus forecast. Undoubtedly, the downside risks are quite significant as most economists have a “wait and see” mentality. Real growth as signified by GDP over the year is projected to advance at a lackluster rate of just 1%. Consumers are expected to remain deeply entrenched in a somber mood, waiting to see where the nation is going. PCE are anticipated to be around 2%, well under the historic average. Business is not expected to fare any better, highlighted by real nonresidential fixed investment, which is exhibiting a negative growth over the next year. There is no doubt that inherent weaknesses mark the state of the nation’s economy. John Silvia, Chief Economist for Wachovia, cites the present mix of growth factors at least helping to keep inflation in check. Rajeev Dhawan of Georgia State University Economic Forecasting Center provides an even more dire mood. Key to his assessment is the untenable position held by the Fed. Following an unprecedented series of liquidity boosts and lowering of key interest rates, ...