Adjusted for inflation, GDP growth in the United States will be a sub-par 2.7% in 2006, half a percentage point below its previous forecast of 3.2%, says Merrill Lynch & Co., New York.
Merrill currently is forecasting 3.5% real growth for 2005, right in line with the potential growth rate of the economy.
Merrill is now assuming oil at $50 a barrel (it had been forecasting $40), no change in the value of the U.S. dollar against other major currencies (it had been predicting a 4% decline) and a federal funds target rate of 4% at yearend 2005 (it had been looking for a 3.5% target rate).