2005 Economic Forecast

Skies Remain Fair, Sun A Little Less Intense

Of the economic forecast roundtables that Ingram’s has held each of the last five years, the predictions from this one seemed the most stable and most composed. After the volatility of the last several years, that stability was welcome.

The roundtable was held at Ingram’s new offices in the Freight House District just hours before an ice storm descended on the area. It was ably chaired by Tom Hoenig, President of the Federal Reserve Bank of Kansas City.

True, last year’s predictions were a little brighter, but they had promised a bounce after a period of instability and uncertainty. This year’s forecast follows a solid year—what Hoenig called an “important transition year”—of growth for gross domestic product (GDP) and jobs. Hoenig anticipates both will continue to grow in 2005.

A Review of 2004

“These sessions are very valuable to me,” said Hoenig, who has chaired four of the last five, “I have ways found them very helpful.” The mix of economists and bankers gives Hoenig a feel not only for what is supposed to be happening, but also what is happening on the ground. As a result, the forecasts have been pretty much on target each year that they have been done.

As to 2004, said Hoenig, “It really was a year in which for the most part we did meet expectations.” He anticipates that when the final numbers come in the GDP will be up 4% from a year ago and that the economy will have added about 2 million net new jobs. Only the surge in energy costs kept the GDP from climbing even higher.

Although the Fed funds went from 1-to-2-1/4% over the course of the year, they remained “still very accommodative.” The deficit, though large, was not as large as anticipated, and as productivity gains slowed, demand picked up enough to pull jobs in to the market and will continue forward. In sum, said Hoenig, “There is still a lot of stimulus in the economy.”

Robert St. Peter
Kansas Health Institute

Tim Michel
Bank of America

Mick Aslin
Gold Banc

Dave Anderson
Gold Banc

Carl Schramm
Kauffman Foundation

Frank Lenk
Mid-America Regional Council

Michael Stellern
Rockhurst Universtiy

Bill Greiner
UMB Bank

Jim Moffett
UMB Bank

Michelle Sweeney, Ingram’s (Host)

Joe Sweeney, Ingram’s (Host)

Chad Sanborn, Ingram’s (Host)