ECONOMIC FORECAST Go-go in '04, slow in '05
WASHINGTON (AP) -- Despite soaring oil prices and a slumping dollar, the United States enjoyed a banner year in terms of economic growth in 2004, but the new year is likely to see a significant slowdown, private economists say.
Analysts believe that rising interest rates, the lack of new tax cuts and the lingering effects of higher energy bills will combine to slow growth next year.
"The performance of the U.S. economy in 2005 will be good but not great, at least in comparison to 2004," said Nariman Behravesh, chief economist at Global Insight, a private forecasting firm in Lexington, Mass.
But what a year 2004 turned out to be in terms of overall growth rates.
Many analysts believe that the gross domestic product -- the total output of goods and services -- grew by 4.5 percent for all of 2004. That would match the boom years of 1999 and 1997 and would be the fastest pace in two decades.
But even with sizzling GDP growth, consumer surveys indicate that many Americans did not feel particularly prosperous. Analysts attribute that to a job market that still has not recovered all the jobs lost since the start of the 2001 recession as businesses pushed hard to get more output from existing employees rather than hiring new workers.
Economists think this boom in productivity may be coming to an end as rising demand is forcing companies to hire more employees.