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Team 90 Five Year Economic Projections Starting May 2005

It is our guess that the economy will continue to improve in fits and starts over the 5 year period 2005 - 2009. 

Energy suppliers and their vendors will be the big winners.  Energy consumers will be looking for alternatives.  Big SUV's are dinosaurs.  Corn, farming, wind, nuclear, solar, IGCC and hydrogen markets will grow. But, coal has to fill most of the energy gap for the next 15 years.

China will eventually revalue the wan but it will not help much since many other countries have cheap labor.  The average standard of living in the USA will come down if we continue to have an open global market.  We will soften the blow by importing cheap workers.  This will then make the American culture less Western European. The US government is counting on high tech to maintain our high standard of living.  This will be hard to do since we can't prevent others from learning and innovating. 

I think we need to innovate more and protect our intellectual property or we all should be learning a second language.

For the period from 2005 through 2013, CBO estimates that real GDP will grow at an average annual rate of 3.0 percent. Thus, CBO projects that the unemployment rate will decline to 5.2 percent (which equals CBO's estimate of the non accelerating inflation rate of unemployment); the interest rate on three-month Treasury bills will reach 4.9 percent; the 10-year note rate will average 5.8 percent; and CPI inflation will average 2.5 percent annually.

Projections have more variation in the out years.

The concerns are the effect of several factors which seem to have no controlling mechanism. Listed in order of our perceived importance they are:

Balance of trade deficits with all our trading partners.

Growing budget deficit and public debt.

Energy Cost