Analysts predict U.S. growth to stall in 2005

Economic signs in the U.S. are far from positive, according to a survey of 45 economists by Swiss Re.
The biannual “economic risk” survey found economists perceive a 13% chance of a stock market crash defined as a 25% minimum decline in a major stock market index as about 13% for both the U.S. and Europe. This is up from an 11% probability given in an earlier survey in April. Swiss Re notes that in the past four decades, the S&P 500 Index has only had such crash once, in 1974, while the German DAX index has had four such crashes in the same time period.
Economists see only a 49% chance of U.S. growth topping 3% in 2005, while in April this was seen as a 72% probability. At the same time, the prospect for growth above 2% in Europe is set at about 33%, up from 19% in April.
Inflation risks are minor, respondents say, and even less prominent than in April. The chance of the U.S. consumer price index rising by at least 4.5% is only 7%, according to economists. In Europe, the chance of such inflation occurring is just 3%, they say. However, there was similarly little chance of prices falling, according to respondents, who rated that possibility at 3% over the next five years.