Feb. 9 (Bloomberg) -- The U.S. jobless rate will decline over the next several years as the economy is forecast to expand an average of 3.7 percent from 2003 to 2007, according to the Bush administration. Unemployment, which averaged 6 percent in 2003, is expected to decline to 5.6 percent this year and 5.4 percent in 2005, according to the annual report of President George W. Bush's Council of Economic Advisers. By 2007 the jobless rate will decline to 5.1 percent and remain there through the following two years.
The economy will grow 4 percent this year on a fourth- quarter to fourth quarter basis, the White House said. Gross domestic product rose 4.3 percent in the fourth quarter of 2003 from the same three-month period a year earlier. ``The administration forecasts that real GDP growth will average 3.7 percent at an annual rate during the four years from 2003 to 2007,'' according to the report. ``Because this pace is somewhat above the assumed rate of increase in productive capacity, the unemployment rate is projected to decline over this period.'' Productivity, a measure of how much an employee produces for every hour of work, will grow at a 2.1 percent annual rate through 2009, ``virtually the same as that recorded during the 43 years since the business-cycle peak in 1960,'' the administration forecasts. After productivity rose 5.3 percent on a year-over-year basis in 2003, White House economists said, ``a period of slower productivity growth is likely as firms shed their hesitancy to hire.'' The administration said it's ``wiser to base the productivity forecast on longer-term averages.''
Interest rates are expected to increase. The White House expects the yield on the Treasury's 3-month bill to rise to 1.3 percent this year after 1 percent in 2003. In 2005, it's forecast to rise to 2.4 percent. //www.bloomberg.com