This past year has been one of growing momentum. In spite of lingering anxieties related to the war on terror, high energy prices, the falling dollar, and other matters, the US economy clearly gained ground. Gross domestic product continued to move upward. The divisive national general election was of significant public interest, and the ultimate implications for the economy remain to be seen. Although such events presented a plethora of challenges to the US and Texas economies, they did not stop the expansion that has been slowly gaining strength over the past several years.
During 2004, consumer spending rose and residential housing investment increased. More and more Americans purchased new homes, helping homeownership to set records (nearly 69%). Productivity also reached extremely high levels, and capital investment manufacturing saw a dramatic hike. In addition, corporate profits are up and industrial and high-tech productions are growing. These upswings have been supported by the overall vigor and traditional resilience of our economies and have helped create a spirit of enthusiasm and optimism about our future. Perhaps most important of all, the economy began to create jobs in impressive numbers.
Despite all the positives that the year 2004 brought us, there were also many uncertainties and bumps in the road. Volatile prices at the gas pump, partially due to the deadly hurricanes experienced by Florida and other southeastern states and record prices for crude oil, hit many household and business pocketbooks particularly hard. The lingering US-led military presence in Iraq has created strained relations within families, between neighbors, whole communities, and even world leaders. Re-establishing Iraqi sovereignty in May did little to quell heated American opinions over the war. Further, our world experienced a different sort of warfare when reports of kidnappings (and the eventual beheadings) of American and foreign citizens abroad became our newspapers’ headlines and flashed across our television screens at night.
However, the year 2004 also saw our country heal further from the tragedy of the September 11, 2001 attacks. New security measures recommended by a panel of US congressmen investigating the World Trade Center attacks were implemented. Congress extended several of President Bush’s tax cuts, implemented to stimulate the economy during the recession, past their expiration date of 2006. The cuts will total nearly $146 billion this year. Conversely, we saw other economic measures taken shortly after September 11th in order to ease the burden of a growing recession phased out as the Federal Reserve board began slowly increasing interest rates from record-setting low levels—great for savings accounts, but bad for 0% financing at your local automobile dealership and other short-term borrowing.
Other events of less economic significance will forever mark 2004 as memorable. The summer brought a truly once-in-a-lifetime event—the 28th Olympiad from Athens. Athens, the birthplace of the Olympics, last held an Olympiad in 1896. American cyclist Lance Armstrong won a record 6th consecutive Tour de France title. Even the Curse of the Bambino could not prevail for an 87th year, and the Boston Red Sox won their first World Series title since 1918.
On a much, much more mundane note, plans for changing from the Standard Industrial Classification (SIC) codes to the new North American Industrial Classification System (NAICS) are still in progress. The Perryman Group will make the adjustment as soon as practical following the completion of the government conversion of the data. At this point, we are receiving data in both formats from various agencies. Similarly, we have not yet converted to the new metropolitan areas defined by the Census Bureau, as that process is still ongoing in the underlying data.
2005 looks to bring many new and exciting things. Over the next several years, positive changes are projected in employment, and the services, trade, and government industries are expected to experience the greatest growth in Texas. More than half of the output in the state will likely be generated by the trade; services; and finance, insurance, and real estate sectors. Overall, things are looking brighter and better for Texas and the US.
Sincere wishes for health, happiness, and prosperity over this holiday season and through the coming year!