Total output for the country, as measured by gross domestic product (GDP), should increase by 3.6 percent in 2005. This is below the 4.4 percent growth seen in 2004, but it is still above the nation's long-term average growth rate. Recent price reports that show some upward pressure on prices will cause the Federal Reserve to continue to tighten the money supply by raising interest rates during 2005, contributing to the slowdown.
The housing market, which experienced a remarkable year in 2004, will see slightly reduced production in 2005, in part due to the higher levels of mortgage rates that will occur because of Federal Reserve policy. At the same time, the job market will continue to improve, adding strength to housing demand.