Merrill Lowers 2006 U.S. GDP Forecast

This year promises to close out on a stronger economic note than initially anticipated, with many economists looking for the fourth quarter to post an annual rate of growth of 2.5% or better. That would result in inflation-adjusted growth for 2005 of about 3.5%, a moderately strong economic figure.

But don't look for a repeat in 2006, warn the economists at Merrill Lynch & Co., New York. Firmly buttoned up in their bear suits, they now foresee just 2.5% GDP growth next year, down two-tenths of a percentage point from their previous 2.7%. The reasons: slightly less consumer spending and greater inventory drag.

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