Monday, May 23, 2005

National Association of Business Economics

They possess a truly sound composition of Economists, but this Author must state they are both too optimistic and too pessimistic. Here is the list of this Author's own predictions:

1) GDP growth rate--will not make 3% in 2005 (their prediction 3.4%) as the American economy already has too many Strikes against it this Year.
2) Their prediction of Labor Cost increases in excess of 4% is all wet, as variations in Productivity growth do not impact that much. Rarely does Wage increases exceed the CPI, because of Business use of Layoffs and Downsizing to cut Labor Costs, unless Labor exerts real muscle in negotiations for a Living Wage.
3) Their prediction of CPI inflation of 2.8% fails of belief: All the Supply and Energy distortions within the Price structure are not only still present, but more impactual. Core inflation will equal, if not exceed, the Core inflation of 2004. A triangular Inflation syndrome has also developed, where non-Core inflation (of the beautiful Stripper's art) has become the Third Rail of Household Cost--directly behind mortgage, Car payment, and Health Care.
4) Their Trade Deficit of $662 bn can only be realized if the Dollar devalues significantly. Real physical Trade components indicate total Trade Product will decline. Author prediction of Trade Deficit: $601 billion.
5) Too much production of Light Crude and Brent, and too little refining capacity. Author's prediction: average Crude Price for 2005: $39.75/barrel; Gasoline: $2.05/gallon; diesel: $2.20/gallon; Heating Oil: $2.40/gallon; Propane: $2.00/gallon. Crude will be much cheaper than the National Association estimate with Gasoline a little cheaper. The real bummer will be the diesel and Heating Oil prices--with Propane unnaturally in step with Heating Oil pricing (major weight Price-gouging without presence of weighted Production Cost increases--can you tell the Author heats with Propane?) The cost of diesel fuel will push up Transportation Costs overall, with much greater impact than ordinary PPI increases (We are talking about a 2% increase in Core inflation.

Now you can all join in the Chorus: WHAT THE HELL DOES HE KNOW??? lgl

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