CUNA Mutual Analysis Sees 4%-Plus Growth For Economy

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Economic growth could top 4% this year, according to a projections from MEMBERS Capital Advisors, the investment advisor affiliate of CUNA Mutual Group.

In its 2004 Economic & Market Outlook, the company said its generally positive outlook for the U.S. economy in 2004 is due in part to the renewed health of U.S. corporations, which are likely to increase their spending and hiring.

"We share the consensus view that the U.S. economy will probably grow above its long-term historical average in 2004, perhaps more than 4%," said Scott Knapp, VP-marketing and client services with MEMBERS Capital.

In addition, rallies in equity and corporate bond markets have significantly lowered the cost of capital, the analysis said, noting a weaker U.S. dollar has boosted the profit margins of multinational corporations helping exports.

Although U.S. consumers bear a heavy burden of debt, MEMBERS Capital Advisors said it believes improving labor market conditions and economic stimulus suggest consumers will stay active. Unless interest rates rise significantly or geopolitical events intervene, MEMBERS Capital Advisors does not expect consumers to pull back enough in 2004 to endanger economic growth, Knapp said.

"The after-effects of the 1990s speculative bubble in stocks may linger, and risks remain, but we still believe that stimulus and cyclical forces will make 2004 feel much more 'normal' for the U.S. economy," Knapp said.

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