Page one of today's Wall Street Journal includes a round-up of the 2005 economic outlook, according to its panel of 56 forecasters. (If you act fast, you can download the data at The WSJ Online -- look in the "Interactive Features" section.) Here's the bottom line:
The U.S. economy will perform well in 2005, according to a survey of economists' predictions, with modest but healthy growth, subdued inflation and only slight rises in interest rates.
What's are "slight rises in interest rates"? Here you go:
The consensus calls for the federal funds rate, a key short-term rate controlled by the central bank, to rise to 3% by June and 3.5% by December...
Are you the betting type? Here's the line.
Overall, economists put the chances of a recession at 11% in 2005, rising to 22% by the end of 2006.
Not bad. Since 1946, 16 years have contained at least one month that was part of an officially designated recession, according to the National Bureau of Economic Research Business Cycle Dating Committee. That would be about 27% of the time.
You might say: But wait a minute. 2005 is only the fourth year after the 2001 recession. How many times did we get a recession within four years of the end of the previous recession? Answer: Five of the 15 recession-containing years prior to 2001 were followed, within four years, by another year with at least one recession month.
Or: But wait a minute. 2004 was a pretty good year. How many times did we get a recession-containing year following a non-recession year where growth was in excess of 3 percent? Answer: Only one. (The 1956-57 recession -- the 1981-82 recession doesn't count because 1980 contained an official NBER contraction.)
There were, of course, some dissenters, but all in all, it's a pretty confident bunch.
For the most part , forecasters are bullish -- and most are backing their forecasts with their own money. Thirty-seven of the economists surveyed say they expected the Dow Jones Average which closed the year at 10783.01, to finish 2005 between 11000 and 11999, which would imply a gain ranging from 2% to 11%; an additional six said it would cross 12000...
UPDATE: Larry Kudlow endorses the consensus (via Instapundit).