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Tech
Businesses will continue to buy PCs,
but at a more moderate pace later
this year and next. That will drop growth of U.S. sales of computers
into single digits after two years of double-digit gains.
Look for a 9% sales gain in the U.S.
this year, a single point below last
year’s rise. Sales growth in 2006 will be a more modest 5%-6%. By
then, most companies looking to replace equipment will have done so.
Double-digit growth will return by
late 2007, when an all-new version
of Microsoft Windows makes its debut, sparking a new wave of buying.
If the operating system, code-named Longhorn, works as planned, it will
lessen vulnerability to spam, viruses, worms, and other nuisances.
Advances in computers promise to be
dramatic. Longhorn and other technologies
in the works will allow PCs to run much more efficiently. By the end
of the decade, technology advances will bring much of the enormous processing
power of today’s high-performance supercomputers to ordinary office
desktops.
Cell phone and Web use during commercial
flights will be OK’d by the Federal Communications Commission in a year or so. After testing,
the agency is confident that their use doesn’t harm navigation
systems and air-to-ground communications between pilots and control towers.
Phone connections will be fast with new satellite technology being developed
by Boeing. Low-power switches installed in airliners will transfer calls
via satellite to and from airborne cell phone users. The switch is designed
to work with all cell phones in use today.
Airlines welcome the move. They’ll cash in by taking a share of
the premium prices that wireless carriers will charge for the service.
Trade
Good news for exporters to Mexico: Another
strong year is on tap, with
the Mexican economy expanding by 4%, the same as in 2004. Most in demand:
Auto parts, electronics, IT, machinery, and plastics.
Longer term, however, Mexico’s economy faces serious risks. The
country’s tax, education, and energy sectors all need improving.
But, with growth humming along now, there’s little impetus for
change. The longer reforms are put off, the gloomier the outlook for
the economy.
A good year for exports to Canada, too: Canadian GDP growth for 2005
will reach 3%, a slight improvement over last year’s 2.7% pace.
That will underpin demand for IT, software, building supplies, and more.
The economy
Inflation will remain well behaved this
year, even as many firms push
ahead with price increases for their goods and services. The hikes
likely will be modest, not enough to spark higher inflation. And oil
prices will hold roughly steady, unlike last year’s 35% jump.
Look for the Consumer Price Index
to gain only about 2.5%, down from
3.3% in 2004. Excluding food and energy, it’ll rise about 2%.
Odds are the Federal Reserve will adopt
an inflation target after Chair
Alan Greenspan’s term on the Fed’s board of governors expires.
Greenspan has long rejected that approach to keeping inflation in check,
but possible successor Ben Bernanke and other Fed policymakers favor
it.
A target of, say, 2% or so would eliminate
guesswork by markets about
whether the Fed will raise or lower short-term interest rates. It would
also ease fears that a post-Greenspan Fed will be more lax on taming
inflation. A target would compel the Fed to stay the course.
But it wouldn’t be set in stone. It would be simply a guideline,
subject to change, and not written into law as in some countries.
© 2005 The Kiplinger Washington Editors, Inc.
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