Business Economists See U.S. Jobs Recovery, Inflation Threat

By Agence France-Presse Jobs grew for the first time in three years but inflation reemerged as a threat for 2004, top business economists said in a survey released Jan. 20. The U.S. economy is expected to grow solidly this year, according to the fourth-quarter survey of 107 members of the National Association of Business Economists (NABE). Fifty-one percent of the panel tipped 2004 U.S. economic growth of 2% to 4%, and another 42% forecast an expansion of at least 4%, the NABE said in a report. After 11 quarters of contraction, the NABE panelists also reported growth, albeit meager, in employment. Eighteen percent said employment was up in the last quarter of 2003, and 17% said it was down, producing a "net rising index" of one, compared to minus nine in the previous quarter. "Employment grew for the first time in three years, according to our NABE panel," said NABE president Duncan Meldrum. "Against a backdrop of surging demand, rising capital spending and improving margins, the NABE panelists also reported stepped-up hiring plans, indicating to me that we finally have a sustainable recovery." Thirty-four percent of the business economists said they expected their firms to boost employment in the next six months, up from 21% in the previous quarter. But "rising prices, combined with expectations of even higher prices and costs in the near future, raise inflation as a potential 2004 issue," Meldrum said. The Federal Reserve has indicated that it feels under no pressure to raise interest rates with inflationary pressures subdued and no clear evidence yet of a jobs recovery. The Federal Open Market Committee next meets Jan. 27-28 to ponder the federal funds target rate, which now stands at 1%, the lowest level in more than 45 years. Copyright Agence France-Presse, 2004