Merrill: Looking Beyond 2005's 'Write-off'

Although we're just into the first month of 2005 the economists at Merrill Lynch & Co., New York, believe that 2006 will be a better economic year for the U.S. than they expect 2005 to be.

"It looks like 2005 is going to be a mini-replay of all those years when the [Federal Reserve] tightened into a slowing profit growth environment. Tack on the typical performance a year after an election, especially after GOP victory, and this year looks like a write-off," says David A. Rosenberg, Merrill's chief North American economist.

What do he and other Merrill economists like about 2006? Lower oil prices, averaging $37 per barrel, are among them. And a couple things happening this year will contribute. They foresee the Federal Reserve's monetary tightening ending this summer. And they expect mergers and acquisitions this year will tax excess capacity out of the U.S. industrial sector.

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