By Scott Nishimura, Fort Worth Star-Telegram, Texas

Mar. 3--PLANO -- The U.S. economy should see sluggish growth for the next two years, but North Texas will fare better because of its tax structure, business incentives, central location and quality of life, SMU business Dean Albert Niemi said Tuesday in an annual forecast.

Texas will add 15 million jobs over the next 20 years, more than 50 percent above the national growth rate, said Niemi, the dean of the Cox School of Business at Southern Methodist University.

Niemi sided with other forecasts that call for 2.8 to 3 percent growth in U.S. gross domestic product this year. He said the nation's fourth-quarter surge of 5.7 percent, which was more than anticipated, was the result of businesses replenishing depleted inventories.

He predicted that the U.S. unemployment rate will "bounce around 9-10 percent this year" and that inflation will remain about 2 percent through year's end, when he expects the Federal Reserve to make its first attempt to raise interest rates.

He said there's a 30 percent chance the U.S. will drop back into a recession early next year, coinciding with the expiration of Bush-era tax cuts, a potential rise in inflation, Fed efforts to contain inflation and a drop in stimulus-related spending.

Niemi also predicted that there will be pressure in Washington to institute a national sales tax to help pare the growing national debt.

"I think you probably will see a national sales tax, and that's going to hurt poor people the most," he said.

Contributing to the sluggish recovery, he said, are the lack of job growth, not enough tax cuts in the federal stimulus, the Democrats' aggressive push on healthcare, the depressed housing market, the plunge in consumer spending and a corresponding rise in the savings rate.

The stimulus was loaded with too much spending and not enough tax cuts, Niemi said. "I think we fumbled the ball." The healthcare push, he said, "has frozen the labor market."

As for North Texas, Niemi predicted a continued rise in corporate relocations here from depressed U.S. markets such as California and the Northeast.

"The recovery will be robust here," he said.

Niemi said he foresees no decreases in federal spending "till we have term limits in Congress. People want to develop pork-barrel spending back home."

Scott Nishimura, 817-390-7808

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