At Business Forecast 2005 in Chicago on December 1, two experts predicted an upswing for 2005 while a third said the U.S. economy is in decline.

Full text of speeches: Kroszner, Stern, Zonis.

Stern and Kroszner See Rebound for U.S. Economy, but Zonis is Less Optimistic.

The U.S. economy is likely to continue its upswing in 2005, two of three panelists agreed at Chicago GSB's annual Business Forecast December 1. Those who see a rosy future were professor of economics Randall S. Kroszner, who served on President Bush's Council of Economic Advisors from 2001 to 2003, and Joel M. Stern, '64, managing partner and CEO at Stern Stewart & Co. in New York.

But Marvin Zonis, professor emeritus of business administration, said, "the U.S. is in an era of economic decline," pointing to the trade deficit as well as the U.S. budget deficit. "A lower value for the dollar and slower U.S. economic growth in 2005 seem to be likely," he told a crowd of about 900 alumni and business executives gathered downtown at the Chicago Marriott for the 43rd annual forecast.

Stern and Kroszner, however, agreed that the economy had performed fairly well in 2004, despite media reports to the contrary, particularly during the presidential campaign. They agreed the economy would likely continue to do well in 2005. "It'll be fairly rosy. I predicted an increase of 3.9 percent in the GDP, and that was even before the release of updated data yesterday, so now I think it'll be in the low fours," Kroszner said. Still, he dubbed his prediction "the Rodney Dangerfield recovery," saying that, like the famed comedian, it would "get no respect." "You read the press or talk to people in the street and they say the economy is sputtering," Kroszner said.

Stern agreed, pointing to the presidential campaign. "John Kerry and his advisors seemed to be rooting for bad news," he said. "At first, the recovery in the U.S. was mild, but for the past two years it has been brisk, deep, and widespread. A mild downturn usually means a mild upturn—and that is precisely what happened." He predicted the GDP would increase by 3.8 percent.

Stern, who has been a BFL panelist since 1981, hit the mark several times with his forecast for 2004, accurately predicting growth while other economists worried about issues like job loss and the federal deficit. "If a $500 billion deficit is so alarming," he said Wednesday, "how come interest rates remain so low? Obviously, economic agents like you and me clearly are not bothered by a large budget deficit."

Zonis, however, said, "Our current account deficit is at record levels, and the willingness of the world to finance our budget and trade deficits is diminishing."

All three panelists agreed that the economic outlook for Europe in 2005 is poor, particularly in Germany , where they predicted a recession.