The latest National Association of Business Economists came out this morning, forecasting a relatively tame economic environment through 2007:

�The NABE panel sees the economy heading for a period of slightly below-trend
growth with moderate inflation for the rest of this year and next,� said Stuart
Hoffman, NABE president and chief economist at PNC Financial Services Group.
�The NABE forecasters expect the economy to withstand the hits of higher oil and
gasoline prices and interest rate increases. The panel projects real GDP growth
to average 3.1% for the next seven quarters along with core CPI inflation
stabilizing near 2.3%. Only one more Fed funds rate increase to 5.0% is expected
this year. The NABE panel repeated that high and rising energy costs remain the
biggest downside risk to economic growth and upside risk to inflation.�

The second quarter forecast at 3.5% strikes me as a little high, and as said before I think we're good for two increases in the Fed funds rate (to 5.25%). Five forecasters in the survey (I'm reading the subscriber link) had Fed funds at 5.5% or more by end 2006 and 5.75% by end 2007. It's relatively clear that forecasters are not projecting a recession in 2007 just yet.

Barry Ritholz notes how weird this expansion has been so far.

...weak dollar, strong corporate profits at the top of the historical range, a compressing P/E far more than previous periods, and a white hot rally in gold...

and the forecast calls for 2.1 million jobs created this year, keeping up that pace from 2004-05. I'm glad I only forecast the local economy; the national one is a real puzzle to me right now. You have to wonder if the Fed ever looks at gold, or whether it's focused on housing?