CIAO DATE: 11/04

The US Economic Outlook

Abstract

Why is growth slowing?

• Oil prices have risen and are expected to remain high
• Slow job and wage growth result in slow income growth
• Low interest rates kept housing and auto sales strong after 2000—borrowing future growth
• The Iraq war and the terrorism threat may be a drag on confidence. Because 9/11 did not have significant macroeconomic effects, the impact of the war and terrorism seems to be mostly on oil prices
• No new stimulus from monetary or fiscal policy

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