2006's Economy Same As 2005's: Disaster!

Democratic Politicians, Paul Krugman To Be Hardest Hit

A fifth straight year of economic expansion in 2006 promises to mean new jobs, higher pay, and maybe even fatter investment portfolios for millions of Americans.

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There's no guarantee that the economy will actually match current expectations of 3.4 percent growth next year. But of more than 50 business economists surveyed by Blue Chip Economic Indicators, all but five see growth of 3 percent or higher. The lowest forecast is 2.6 percent. The upshot for those who work, shop, and invest would be a solid but not exciting environment.

"I think we'll see decent income growth and decent job growth," says Nariman Behravesh, chief economist at Global Insight in Lexington, Mass. "The average household will be better off, but moderately."

The consensus forecast calls for:

• Rising pay. Disposable incomes will rise by 3.2 percent, after inflation, more than double this year's gain.

• Costlier borrowing. ... [though] small upticks from current levels.

• Moderate inflation. The consumer price index will rise 3.0 percent during 2006, down slightly from 2005.

• Healthy profits. Corporate earnings will grow 7.9 percent, but that's less than half the pace of 2005....

• A strong job market. Unemployment to remain level at 5.0 percent. While job creation is not forecast in the Blue Chip survey, some experts call for job growth to reach 2 million for the year, higher than 2005 and much stronger than the early years of the current economic expansion.

Let me add in my own forecast that Iraq will be largely stabilized by the summer of 2006, prompting the withdrawal of 20,000 more troops, and I'd say that the Democrats are in a spot of trouble.

Then again, they can always rely on the nation's ravenous hunger for gay-marriage and Brokeback Mountain, as Frank Rich believes, to help them win the culture debate. So they've got that working for them.

posted by Ace at 10:18 PM

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