A Moderate U.S. Slowdown

By two different measures, economic forecasts from two respected manufacturing groups this past week suggest the U.S. economy will grow 3.4% this year, a full percentage point below 2004's 4.4%, but better than the 3.2% that Merrill Lynch & Co. is projecting.

The Manufacturing Institute, an arm of the Washington, D.C.-based National Association of Manufacturers, foresees U.S. GDP growth at an annual rate of 3% during the first half of 2005 and at a 3.8% rate from July through December. That would produce a 3.4% rate of increase, when comparing the fourth quarter of 2005 to the final three months of 2004, the institute says.

Meanwhile, the Manufacturers Alliance/MAPI, an Arlington, Va.-based business and public policy group, is confirming its earlier forecast for 3.4% year-over-year inflation-adjusted U.S. GDP growth in 2005. It has, however, reduced its GDP forecast for 2006 by three-tenths of a percentage point to just 3%, the low end of the economy's long-term growth potential.

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