NEW YORK -- The U.S. economy will grow at its current 4% rate through 1995, according to the Conference Board.
With the exception of single-family housing, expanding sectors of the economy -- construction, investment, and exports -- are benefiting from strong underlying fundamentals or from the completion of long-term structural adjustments, the business research group said.
Despite higher interest rates, these sectors' prosperity will help provide the income to sustain the consumer, the organization said.
"The effect of higher interest rates will be to stabilize the nation's growth rate rather than to depress it," said Gail D. Fosler, vice president and chief economist of the Conference Board.
"The management challenge for business will be to continue to achieve high productivity in an economy in which growth has leveled off.
"The consumer is providing the ballast that is keeping the economy afloat, but most other sectors are growing faster."
The Conference Board report projects increases in both inflation and interest rates.
"The Federal Reserve Board is looking at the buildup in industrial prices and is concerned that these price increases will spill over into the consumer sector," said Ms. Fosler. "And they are right"
The board's forecast shows the consumer price index picking up nearly one percentage point in the next year, from 2.7% currently to 3.6%. Goods prices will account for most of the increase.