The U.S. economy should do fine this year.[@@]
A top executive at Merrill Lynch & Company Inc., New York, gave that assessment here this week during a review of economic predictions for 2005.
Robert Doll, president and chief investment officer at Merrill’s Merrill Lynch Investment Managers unit, said the U.S. economy will do reasonably well despite pressure from a slowdown in consumer spending and a steady increase in interest rates.
Doll expects growth in consumer spending to fall below 3% this year, from 3.7% in 2004, and he expects interest rates to continue to increase in 0.25-percentage-point increments, unless economic growth is much different from what most economists are predicting.
The changes will slow growth in the U.S. gross domestic product to about 3% to 5%, from 4.4% in 2004, but that growth rate is “respectable,” and it is “still a very good result” for a mature economy, Doll said.
The U.S. current account deficit will continue to be a “structural problem” this year, but they should start to improve for the first time since 1995, Doll said.
The current account deficit is a measure of the balance of trade, international investment and transfers between the United States and other countries.