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MADISON, Wis. – Historic amounts of monetary and fiscal stimulus that helped the U.S. economy rebound late last year should fuel continued growth in 2004. This, according to the 2004 Economic & Market Outlook, recently published by MEMBERS Capital Advisors, the investment advisor affiliate of the CUNA Mutual Group. The economic outlook report is the affiliate’s sixth-annual analysis of trends in domestic, financial and economic markets. “We share the consensus view that the U.S. economy will probably grow above its long-term historical average in 2004, perhaps more than 4%,” said Scott Knapp, vice president of marketing and client services with MEMBERS Capital Advisors. Knapp said this generally positive outlook for the U.S. economy in 2004 is due in part to the renewed health of U.S. corporations, which are likely to increase their spending and hiring. “Profits have recovered, restructuring efforts are completed or well under way, and balance sheets have been shored up,” Knapp said. In addition, rallies in equity and corporate bond markets have significantly lowered the cost of capital, according to the report. A weaker U.S. dollar has boosted the profit margins of multinational corporations and is making American exporters more competitive worldwide, Knapp said. Although U.S. consumers bear a heavy burden of debt, improving labor market conditions and economic stimulus suggest consumers will stay active, Knapp said. Unless interest rates rise significantly or geopolitical events intervene, MEMBERS Capital Advisors does not expect consumers to pull back enough in 2004 to endanger economic growth. “The after-effects of the 1990s speculative bubble in stocks may linger, and risks remain, but we still believe that stimulus and cyclical forces will make 2004 feel much more `normal’ for the U.S. economy than it has the last several years,” Knapp said. Other key findings from the 14-page report include the following: * Stocks had a remarkable year in 2003, but enter 2004 looking fully valued, especially since interest rates may be on the rise. High levels of worker productivity should support further growth in corporate earnings, but companies may still have trouble meeting their shareholders’ current high expectations. * Bonds and interest rates are turning the corner. With a healthier economy and various technical factors exerting upward pressure on interest rates, MEMBERS Capital Advisors believes that, for most parts of the fixed-income market, the best outcome for investors will be to earn their coupon and avoid significant price declines in 2004. * Risks to this generally positive outlook include the rising federal budget and trade deficits, protectionism, rising and/or volatile interest rates, negative geopolitical developments, and elevated energy prices. [email protected]

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