Study Says Mideast Tensions Hamper Economic Growth

A National Association for Business Economics panel expects resolution of the conflict will boost business in the second half of the year.
Rising tensions in the Middle East are coloring business decisions and hampering U.S. economic growth, according to an analytical summary of the consensus of macroeconomic forecasts released Friday by a panel of 37 professional forecasters from the membership of the National Association for Business Economics. However, the group's president, Tim O'Neill, the executive VP and chief economist at BMO Financial Group, says the panel expects that resolution of the conflict will combine with stimulative monetary and fiscal policy to create much stronger conditions in the latter half of this year.

The panel wasn't as positive in its assessment of corporate profits. Earnings now are expected to grow 10.3% for 2003, down from the 15.0% gain predicted in the November survey. This translates into more modest progress in business investment, inventory levels, and hiring, all of which would benefit from better corporate cash flow.

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