MINNEAPOLIS, December 17, 2003—The Federal Reserve Bank of Minneapolis announced the national and regional economic outlook for 2004 during a media briefing today at the Minneapolis Fed. This forecast includes information from the Minneapolis Fed’s statistical models and results from the annual business conditions outlook poll. The following information will be available in detail in the January 2004 issue of the fedgazette.

National Economic Forecast*

• Moderate growth is projected for the national economy in 2004.
• The unemployment rate will likely decrease slightly.
• Modest increases in the U.S. Consumer Price Index are anticipated for 2004.

District Economic Forecast

• The district economy is expected to expand modestly in 2004, according to a poll of business leaders and the Minneapolis Fed’s regional forecasting models.
• Gains in employment and personal income are predicted across the district, while unemployment rates are not expected to change significantly.
• Housing units authorized are forecast to increase slowly in most district states.
• Wages and prices are expected to increase modestly.
• District manufacturers are optimistic for 2004.
• Agricultural producers had a strong 2003 and are cautiously optimistic for 2004.

District Business Leaders Poll Results**

District business leaders appear to have turned the pessimism corner, exhibiting their most optimistic views on the economy and the prospects for their own firms since 1999. Most respondents to the November business outlook poll expect the national and district economies to grow 3 percent or more in 2004. Most predict modest inflation growth; however, within their own communities they envision increases in employment, investment and consumer spending, with only a slight decrease in housing starts. For their own companies, respondents anticipate increasing sales, employment, capital investment and prices. Nonetheless, tight state and local government budgets are expected to have a somewhat negative effect on their businesses.

*Forecast from national and regional models developed by researchers at the Minneapolis Fed. The models use a statistical procedure called Bayesian vector autoregression.

** Key findings from a November 2003 poll of 335 business leaders in the Ninth Federal Reserve District.

As one of the 12 Federal Reserve Banks, the Federal Reserve Bank of Minneapolis contributes to a variety of Federal Reserve System functions, including operation of a nationwide payments system, distribution of the nation’s currency and coin, supervision and regulation of member banks and bank holding companies, and serving as a fiscal agent for the U.S. Treasury. Additionally, the president of Minneapolis Fed serves as a member of the Federal Open Market Committee, the monetary policymaking arm of the Federal Reserve’s Board of Governors.

Together with its branch in Helena, Mont., the Minneapolis Fed serves the Ninth Federal Reserve District, which includes Minnesota, Montana, North and South Dakota, 26 counties in northwestern Wisconsin and the Upper Peninsula of Michigan.

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