Farewell 2004, Hello 2005 (Editorial)

For many, 2004 was just a so-so year in the business world. With that in mind, we say “so long.”

Looking back, the big things that come to mind are fuel prices that went through the roof, job growth (yes there was some, but at a much slower pace than expected or needed) and the wild swings in the stock market. The presidential election was exciting. The campaign wasn’t. And business pretty much went on as usual.

Some of those issues actually seem to have stabilized during the past month. Oil prices have dropped, hiring has picked up, and the Standard & Poor’s 500 has returned nearly 8 percent from the start of the year through mid-December.

Many publicly traded Arkansas companies saw their stock prices rise led by USA Truck Inc. of Van Buren, up 61 percent, Dillards Inc. of Little Rock (61 percent) and J.B. Hunt Transport Services Inc. of Lowell (55 percent).

What does all that mean for 2005? Not much, although speculation can be fun.

Most of what we’ve seen is that 2005 will be like 2004 all over again.

Here’s the gist of the many predictions of economists, analysts and corporate leaders:

• The stock market will be up, although gains may be slow and steady in the 6 to 10 percent range. The wild swings are expected to moderate.

• The economy will expand 3-4 percent.

• Corporate earnings growth will continue, but not at the 20 percent pace of 2004.

• Job growth will continue at a rather slow pace.

• Inflation will remain modest.

• The Federal Reserve Board will probably ratchet up interest rates again.

• 10-year U.S. Treasury notes could rise to 5 percent.

• Mortgage rates could rise by 0.5-1 percentage point.

• Consumer spending will increase about 3 percent.

Although most of the signs point to a decent year, economists see potential problems ahead with the ever-deepening federal deficit and the falling dollar. But economists usually hedge their bets by citing possible problems ahead.

And of course there’s the continuing war in Iraq and the possibility of terrorist attacks that could affect any or all of the above forecasts, as well as other events such as natural disasters that occur.

There you have it. Have a happy New Year.