Strong Growth in '04 will do little to decrease unemployment

[papau]

http://story.news.yahoo.com/news?tmpl=story&ncid=&e=3&u=/ap/20031124/ap_on_bi_ge/economic_outlook

Economists Predict Strong Growth in '04
By MARTIN CRUTSINGER, AP Economics Writer WASHINGTON - The U.S. economy, primed by tax cuts and low interest rates, should grow next year at the fastest pace in two decades, but that will do little to decrease unemployment, top economic forecasters predicted Monday.

The National Association for Business Economics said the vigorous economic growth will continue to be accompanied by strong increases in productivity, as corporations under competitive pressures find more ways to expand output without hiring new workers. That could present a political headache for President Bush in his re-election bid because the unemployment rate is a far more sensitive political barometer than productivity numbers. But unemployment is seen headed in the right direction, at least, with a NABE forecasting panel predicting the jobless rate will average 5.8 percent in 2004, down from 6 percent currently. The forecasting panel saw payroll employment rising by 1.1 percent, or about 1.3 million workers, not enough to replace the 2.3 million jobs that have been lost since Bush took office in January 2001. While Democratic opponents are expected to point to weak job growth as a sign of Bush economic failures, the White House is apt to contend that the stronger economic growth is an indication that the president's tax cuts are starting to work.

The NABE outlook, assembled by a panel of 28 forecasters from various industries, predicted that the overall economy, as measured by the gross domestic product, or GDP, will grow by 4.5 percent in 2004. If that forecast comes true, it would represent the fastest GDP growth rate in 20 years, since the economy surged 7.3 percent in 1984 when Ronald Reagan was running for re-election. "We are looking for a very strong bounceback," said NABE President Duncan Meldrum, chief economist at Air Products & Chemicals Inc. of Allentown, Pa. He said the biggest threats to the forecast are that job growth will turn out to be even weaker than currently envisioned, which could undermine consumer spending, or that consumer and business confidence will be rattled by a further escalation of terrorist attacks. The report said GDP — the value of goods and services produced within the United States — will rise 3 percent for all of 2003, up from 2.4 percent growth in 2002.

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The nation's twin deficits are projected to worsen, with the merchandise trade deficit forecast to hit a record $525 billion this year and set a new mark of $545 billion in 2004. The federal budget deficit, which reached a record $374 billion in 2003, will climb to $462.8 billion for 2004, the NABE panel said. With economic growth rebounding, it said, interest rates will rise at a moderate pace. The 10-year Treasury note, a key determinant of mortgage rates, was projected to climb to around 5 percent by the fourth quarter of next year, up from around 4.2 percent now. That would mean that 30-year mortgages will likely rise to around 6.6 percent by this time next year, from 5.83 percent currently.<snip>

DOC data
Bush "Growth" with Hoover like job loss over 4 years
2004: 4.5 percent estimated
2003: 3.0 percent estimated
2002: 2.4 percent
2001: 0.3 percent
Clinton 8 years
2000: 3.8 percent -- -- only calendar year that National Debt actually decreased
1999: 4.1 percent
1998: 4.3 percent
1997: 4.4 percent
1996: 3.6 percent
1995: 2.7 percent
1994: 4.0 percent
1993: 2.7 percent
Bush 41 term - ends with Debt now up to $4T
1992: 3.0 percent
1991: -0.5 percent
1990: 1.8 percent
1989: 3.5 percent
Reagan 2nd term - ends with Debt increase from $1.0 T to 2.7T over 8 years
1988: 4.2 percent
1987: 3.4 percent
1986: 3.4 percent
1985: 3.8 percent
Reagan first term had worst recession - caused by and after Reagan massive tax cuts - since Hoover - overall Reagan had 3.33%(compound) GDP growth over 8 years, as compared to Carters 3.25% GDP growth over 4 years.