John Makin's analysis in today's WSJ($) seems disturbingly plausible:
U.S. economy is heading for a post-stimulus hangover. The double drag
from higher oil prices (a tax increase) and higher short-term interest
rates is not helping. If we aren't careful, we'll have a recession in
2005. That possibility makes even more dangerous the tax increases
being proposed by John Kerry. …
suggest that higher oil prices cut growth with a lag of six months or
more, notwithstanding Alan Greenspan's claim to the contrary. We
probably haven't yet seen the negative growth impact of the
$25-a-barrel rise in oil since the second half of 2003 and that will
be, conservatively, at least 1 percentage point off of trend growth.
Take away another 1.5 percentage points from the expiration of fiscal
stimulus and cash out refinancings and add in some more drag from
higher short-term interest rates and you are close to zero growth. A
lower stock market tied to earnings disappointments could do more harm.
Falling long-term rates are presently a symptom of slowing growth.
In other words, it's not too early to start worrying … or to ask the Fed to ease off on rate increases. [ProfessorBainbridge.com]