NEWS OF THE WEEK BUSINESS
ECONOMISTS SEE SLOWER GROWTH Housing and autos, two large chemical markets, will remain at high levels
T
HE LATEST FORECAST FROM
the National Association for Business Economics (NABE) predicts 4.3% real growth in gross domestic product in 2004. This is down from members' expectations of 4.7% growth for the year in a survey published in May The reason for the lower expectation is the "soft patch" in the second quarter when the economy grew at just 3 3 % . For 2005, the forecast released at the group's annual meeting in Philadelphia last week is for a slowing of U.S. economic growth to 3.7%. The direction of energy costs
FAULTY
was a huge topic of discussion at the meeting. The association's forecast calls for a decrease in oil price to $40 per barrel by the end of this year and for a further decline to $35 per bbl by the end of 2005. But there was a wide divergence of opinion among meeting attendees, with the range going from the $35figureto as much as $55 per bbl at the end of 2005. In housing, economists don't see the large downturn that many other analysts expect to result from rising interest rates. The NABE forecast does call for a significant slowing in 2005. After an 8.8% increase in residential in-
INTELLIGENCE
IRAQ HAD NO ILLICIT WEAPONS Report finds sanctions, international inspections contained Saddam's threat
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ESTIFYING BEFORE THE SEN-
ate Armed Services Committee, chief U.S. weapons inspector Charles A. Duelfer outlined key findings of a report on Iraq's prewar weapons holdings that sharply undercut the Bush Administration's primary reason for invading Iraq. Duelfer, an experienced former United Nations weapons inspector, told the senators that Saddam Hussein had no stockpiles of illicit weapons nor the capability to produce them when the U S invaded Iraq in March 2003. But, he said, Hussein was subverting U N sanctions by importing dual-use equipment and HTTP://WWW.CEN-0NLINE.ORG
had every intention of reestablishing his weapons programs. T h e conclusions of the 16month search for Iraq's weapons ofmass destruction conducted by Duelfer's Iraq Survey Group are compiled in a massive report released on Oct. 6. They largely underscore the findings of Duelfer's predecessor, David A. Kay Also echoing Kay's January testimony Duelfer admitted to the senators, "We were almost all wrong" about Iraq's weapons. Duelfer's report names companies, countries, and individuals— some of whom are U.S. allies — who aided Hussein's effort to thwart U N sanctions. And for the
vestment in 2003 and a forecast 8.9% this year, residential investment will decline by 1.9% in 2005, according to the economists. David W. Berson, vice president and chief economist at Fannie Mae, sees a greater falloff in unit sales. He told the meeting to expect a 9% ECONOMY decline in 2 0 0 5 new GDP growth will slow next year home sales from 2004 GDP growth levels and a 7% fall in ex5' isting home sales. Despite these declines in both new and existing home sales, he said 2 0 0 5 would be the third strongest year ever for both categories. Like housing, auto a Forecast. GDP = gross domestic product. SOURCES: Department of Commerce, sales will be little afNational Association for Business Economics [forecasts) fected by higher interest rates. The NABE survey forecasts light vehicle sales of 16.6 million units next year, little changed from the consensus forecast of 16.7 million for all of thisyear.-WILLIAM ST0RCK
first time, it offers evidence that Iraq's intelligence service was using secret labs to produce chemical and biological agents on a small scale, probably for assassinations. Duelfer said Iraq's weapons and its production capabilities were essentially destroyed in 1991. Its chemical industry, for instance, could conduct some dual-use research but had only partially recovered the production capability that had been devastated by past Gulf wars and ongoing sanctions. But, he said, when sanctions were removed, Hussein intended to focus on developing ballistic missiles, tactical chemical weapons, and a nuclear capability Kay tells C&EN that Iraq's science and technology base was too seriously degraded to turn intentions into actual weapons. In fact, Kay is doubtful that Hussein could have reconstituted his weapons programs: "The regime was descending into this vortex of corruption, and I just don't think he could have done it."—LOIS EMBER C & E N /
AP P H O T O / E V A N VUCCI
OCTOBER
11,2004
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