ERMUSR MISC. ISSUES 01-13-2004 - Laserfiche WebLink

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STRONGER BUSINESS SPENDING is in the cards. We ex- facturers' rebates are likely to keep dealers' show- pect companies to increase spending by 10% in 2004, rooms busy. But the same incentives will keep profit after a meager 2.5% rise in 2003 and two straight margins slim for manufacturers. They'll continue to years of declines before that. Leading the rebound: pressure parts suppliers for lower prices, buying more purchases of new equipment. Trailing: office and fac- and more from China and other low-cost producers. tory construction. Spending on information technolo- gy will climb 6% or so, twice as much as this year. A STRONGER U.S. FARM SECTOR is in the offing. Wacky weather patterns have skewed grain production world- A COOLER HOUSING MARKET is likely, but builders and wide,boosting the U.S. market share. Farm exports are sellers will enjoy a good year. Housing starts and likely to be worth nearly$60 billion in 2004,up more home sales both will dip 4% to than $3 billion over 2003. The 5% next year, leasing them at A cooler lingering effects of the mad cow still-high levels. Any negative im- disease scare in Canada are sure pact from higher mortgage rates housing market to help keep U.S. meat prices will be offset by job growth. firm. The numbers: Housing is likely, but builders Meanwhile, generous farm starts will total about 1.65 mil- supports from Washington, high- lion in 2004, down from 1.72 and sellers will enjoy er land values in the Farm Belt million this year. Total home and low interest rates every- sales will ease to 5.5 million after a good year. where will help keep the farm this year's record high of nearly economy stable. 5.8 million. Sales of new homes, which also set a record this year by topping a million,are likely to slip A GOOD YEAR FOR THE TRUCKING INDUSTRY is coming a bit, to about 970,000. First-time buyers will stay in up, probably the best since 2000. A major shakeout in the market because 30-year mortgages rates will re- the business is over. The stronger economy, especially main under 7%. in retailing and manufacturing, is increasing demand for trucking. Freight haulers plan to raise rates,proba- SLOW COMMERCIAL CONSTRUCTION will continue into bly by 6% or so. Smart shippers will look for breaks 2004. High vacancy rates for office and retail space by joining with others to earn volume discounts. dampen those sectors,and apartment construction will be slow until developers are convinced that job STRONGER EARNINGS IN FINANCIAL SERVICES are likely growth is for real. As a result, rents are likely to slip a in 2004. An improving economy means more bank bit. Tight state and local budgets will dictate less lending. But insurance companies,hurt by years of spending on schools, roads and other public works. cutthroat price competition and hefty claims from Hurricane Isabel and the California wildfires,won't STRONGER RETAIL SALES are likely to extend through be offering premium discounts anytime soon. the holidays. Holiday spending,expected to be up 6% this year over last, will be fueled by federal tax THE HEALTH CARE BOOM has no end in sight, even as cuts, mortgage refinancings and the rebounding stock employers and the government grapple with the ques- market. Next year, retailers will see stronger unit tion of how to pay for it. Managed care firms and sales, but profits won't grow much because retailers nursing homes will do well in 2004. Pharmaceutical will have to keep discounting to remain competitive. companies, though, face a problem: The patents on some big-name medications are running out,opening A RISE IN AUTO SALES is coming in 2004, to 16.6 mil- up competition from generics. lion vehicles. Nearly 40% of new vehicles sold in the U.S. next year will have a foreign nameplate. By 2010, TRAVEL INDUSTRY DOLDRUMS will continue in 2004— the percentage will be 50%. But a growing number of lingering fallout from the Sept. 11 attacks. The num- "foreign"cars and trucks are already made in the ber of foreigners traveling to the U.S. will increase by USA, mainly in new car plants in the Sunbelt. about 5%, but the 2000 record of 51 million won't be Fresh models,0% financing and tempting manu- matched until 2006 at the earliest. WHAT'S AHEAD FOR 2004 1 3