NABE OUTLOOK SURVEY SEPTEMBER 2003

1
NABE OUTLOOK SURVEY SEPTEMBER 2003

• Presented to AUBER Fall Conference
• October 15, 2003
• Duncan Meldrum
• NABE President and
• Chief Economist, Air Products Chemicals, Inc.

2
OUTLOOK SUMMARY

• Stronger Growth Than Forecast in May
• Employment Begins to Recover in 03Q4
• Deeper Federal Deficit Than May
• No Inflation Threat
• Federal Reserve Restrained
• Long Rates Rise With Recovery
• Profits Continue to Recover
• But at a Slower Pace Than Forecast in May

3
REAL GDP GROWTHSEPT FORECAST STRONGER 2003
2004
4
MAIN SOURCES OF GDP STRENGTHLESS RELIANCE ON
POLICY IN 2004?
5
REAL GDP GROWTH RATES
6
2003 OUTLOOKSEPTEMBER VS MAY
7
2004 OUTLOOKSEPTEMBER VS MAY
8
INVENTORY INVESTMENTNOW NOT EXPECTED UNTIL 2004
9
WHAT MONTH WILL PAYROLL EMPLOYMENT FIRST GROW BY
100,000?
10
(No Transcript)
11
WHAT IS THE LEADING CAUSE OF THE RECENT REBOUND
IN BUSINESS INVESTMENT?

• 60 Replace Aging Equipment
• 26 Enhance Productivity
• 14 Expand Capacity to Prepare for Higher Demand

12
(No Transcript)
13
(No Transcript)
14
INFLATION IS NOT AN ISSUE(AND NEITHER IS
DEFLATION AS THE PANEL PUTS THE PROBABILITY OF A
DECLINE IN THE CPI AT JUST 10)
15
WHEN DOES THE FED BEGIN TO RAISE INTEREST RATES?
16
INTEREST RATE OUTLOOK
17
WHAT DROVE LONG RATES HIGHER SINCE THE MAY SURVEY?
18
Federal Deficit ForecastDeepens
19
(No Transcript)
20
AFTER TAX CORPORATE PROFITSGROWTH, BUT SLOWER
THAN FORECAST IN MAY
21
CLUES TO MORE MODEST PROFIT GROWTH IN 2004Other
than productivity, most changes would slow profit
growth
22
OUTLOOK SUMMARY

• Stronger Growth Than Forecast in May
• Employment Begins to Recover in 03Q4
• Federal Deficit and Trade Deficit Widen
• No Inflation Threat
• Federal Reserve Restrained
• Long Rates Rise With Recovery
• Profits Continue to Recover
• But at a Slower Pace Than Forecast in May