A panel of economists will take their best guess this morning at the 2005 Economic Outlook at the Hyatt Regency hotel downtown, sponsored by the Cincinnati USA Partnership.

The national picture is fairly clear, members of the panel said. The U.S. economy will grow more slowly in 2005, but still at a healthy rate. Unemployment will dip a bit, as more adults join the work force.

But the local picture "is a harder one to judge," said Richard Stevie, a panel member and economist for Cinergy Corp. Delta Air Lines' financial problems and the continuing loss of manufacturing jobs are unpredictable factors, he said.

The panel last year came up short, predicting stronger job growth than has been reported so far in 2004. The economists expected local job growth this year of 1.3 percent, or about 13,000 jobs, but through August only about half that many jobs have been created, and growth appears to be weakening.

The panel also expected the slide in manufacturing employment to end during the year. Instead, the region has lost about 3,000 manufacturing jobs this year through August, bringing the number of jobs lost since 1999 to 20,000.

"We underestimated the strength of consumer spending, and we underestimated business fixed investment," said panelist Thomas Zinn, a University of Cincinnati economist who provides forecasts to the Northern Kentucky Chamber of Commerce.

Zinn said he expected the war in Iraq to take a bite out of consumer spending, but the effect was less than anticipated.

Blame part of those missed projections also on the data.

The U.S. Labor Department revised 2003 jobs totals in March, and showed the recession and job losses locally were deeper than originally reported.

Had those numbers been available last summer, the panel might well have painted a less optimistic picture for this year, Stevie said.

But he also hinted at the intangibles that drive an economy, that don't fit neatly into computer models - the shadow of a Delta bankruptcy, for instance. "It seems the city needs some sort of spark to get it going, and it can't get over that hump," he said. Stevie cited problems in the city center - delayed development on the riverfront, the loss of population - that might be holding the region back economically.

Still, Cincinnati might have the best economy in the region, said Stuart Hoffman, chief economist at PNC Financial Services Group Inc. in Pittsburgh. PNC expects the local economy to have higher job growth and lower unemployment than the nation as a whole, and is even projecting a turnaround in manufacturing employment.

PNC expects the region's total employment to grow 1.2 percent in 2005 - an addition of about 12,000 jobs - and manufacturing to grow 0.8 percent.

That's barely 1,000 jobs, but it's a move in a positive direction.

"The Cincinnati metro area has consistently been one of the better performing metros in the region," said Hoffman, who is not a member of the panel. Cincinnati's "relative outperformance will hold up through 2005, pretty much as it has the last couple of years."

The highlight of the morning comes right after breakfast, when the president of the Federal Reserve Bank of Cleveland, Sandra Pianalto, delivers the keynote address on the economy, and takes questions from the audience. Pianalto is a voting member of the Fed's Federal Open Market Committee, which sets interest rates for the nation. This is her first speech in Cincinnati since being named president in December 2002.

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