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...economies turned strong performances. The Valley's gross domestic product (GDP) is estimated to have grown at a hearty 4.1 percent rate for 2005. This is only slightly lower than the 4.4 percent rate that was predicted in these pages last year and compares favorably with the estimated 3.6 percent rate for national GDP.
Still, the growth in 2005 represented a slowdown from 2004 for both the region and the nation, and these economies are expected to slow further in 2006. This is not to say that the economies will be limping along. Quite the contrary, conditions overall look good for 2006. National GDP is expected to grow at 3.5 percent, above the 3.0 to 3.25 percent range for trend growth. Regional GDP growth is expected to match the national rate.
Several ongoing factors in the national economy are expected to be reflected in the Valley's economy in 2006. First and foremost are high energy prices. Even before the hurricanes, energy prices were riding at a high level due to robust world economic growth after the 2001 recession, with particularly strong demand from China and India. Moderating demand and faster supply growth had been reigning in energy prices when the hurricanes crippled Gulf facilities, curtailing supplies and sending prices temporarily soaring. Prices have already declined considerably as Gulf operations resumed. But, these operations have returned in the order of ease of recovery. Those operations that are still down will take longer to bring back up, so Gulf supply will be a concern well into next year.
Also, since oil, both crude and refined, is traded on the world market, supplies shifted around the world fairly quickly and prices settled down from the spiking rates, though still at a higher level than before. Natural gas is more troublesome since it is a much more geographically restricted market. Supply...
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