NEW YORK (CNN/Money) - Harry Truman got so tired of "either/or" predictions on the economy that he once cried out for a "one-handed economist."

Truman wouldn't take much solace in the 2004 outlook. Sure economists, on average, expect gross domestic product (GDP), the broadest measure of the economy, to grow 4.3 percent, versus an estimated 2.9 percent in 2003, according to the Philadelphia Federal Reserve's latest survey of 34 economists.

On the other hand, last Wednesday's negative durable goods report raises anew the question of how strong the economic recovery is. Orders for long-lasting U.S. manufactured goods plunged 3.1 percent in November, defying Wall Street's expectations for a 0.8 percent rise.

And even if November's decline turns out to be an anomaly -- October's report was sharply positive -- questions remain about how consumer prices, the Federal Reserve, the job market, the federal deficit and the dollar will react to stronger growth. Unsurprisingly, economists believe these could go ... well, either way.

On the one hand ... inflation should be rising

Commodity prices have surged, the dollar has weakened and people are buying gold like it's going out of style, leading some observers, including influential bond-fund manager Bill Gross, to believe higher inflation is inevitable -- especially in an economy running at its cruising speed.

"There will be a time when inflation will turn around," said Anirvan Banerji, economist at the Economic Cycle Research Institute, which publishes a monthly leading inflation gauge.

On the other hand ... not yet

But, oddly, consumer price inflation has slowed down, despite steady gains in health-care and education costs. Indeed the Commerce Department said its personal consumption deflator, which the Fed watches closely, rose at a paltry 0.8 percent in the past 12 months -- the lowest rate in history.

"So many clients are telling us that we are just plain wrong and there is inflation everywhere," Merrill Lynch chief economist David Rosenberg, a vocal inflation skeptic, said recently. "But ... the bulk of these complaints come from folks who have kids in college ... Prices set according to supply and demand are flat or falling for the most part."

Harvard economics professor Kenneth Rogoff, in a study published this week by the Kansas City Fed, suggests smarter central banks, globalization and other factors have helped keep inflation low and could continue to do so for several years to come.

And last week, Richmond Fed President Alfred Broaddus, a voting member of the Fed's policy committee -- and a noted inflation hawk -- said inflation was too low by at least 0.5 percentage points, and some economists think it could take several months to make up the difference.

On the one hand ... the Fed could raise rates soon

Investors think there's a good chance the Fed will raise rates at its May 4 policy meeting, according to the federal funds futures market.

If inflation is coiled to spring all at once, as some observers fear, then the Fed might be forced to hike rates and cool off the economy faster than it would like.

On the other hand ... they might not

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If inflation takes as long to creep up as some economists believe, then the Fed's next move might not be until 2005.

"Given that the economic data will be strong, people will wonder why the Fed is not moving, which could cause some volatility in the markets," said former Fed economist Lara Rhame, now senior economist with Brown Brothers Harriman. "But we think the Fed will remain on hold for quite some time."

On the one hand ... the labor market's weak

Critical to the Fed's decision will be the labor market's health. Despite blistering economic growth in the third quarter, job growth has been slow to recover, as companies have milked more work out of fewer workers, sparking the biggest productivity gains in decades.

U.S. non-farm payrolls are still lighter than in November 2001, when the latest recession ended, marking the longest such stretch since World War II. The number of people jobless for 27 weeks or longer is at its highest level since 1992, and the average period of unemployment is at its longest since 1983.

And the unemployment rate is generally not expected to fall much in 2004, since signs of a recovery will bring discouraged job-seekers out of the woodwork. If they can't find jobs right away, they officially join the ranks of the unemployed.

On the other hand ... it may not be for much longer

But many economists think jobs are just around the corner. Recent surveys of manufacturers have shown an appetite for new workers for the first time in years, and economists believe companies can't keep milking the productivity miracle forever.

"I don't believe anybody thinks [this sort of] productivity growth can continue," Bill Cheney, chief economist at John Hancock Financial Services in Boston, told CNNfn. "What that means is we'll soon have a lot of job growth."

On the one hand ... the federal budget deficit is getting fat

2004 is an election year – usually good for the economy – and it's likely that incumbents will pull out all the stops to insure they keep on being incumbent. The 2003 tax cuts, the biggest treat President Bush and Congress gave the voters this year, will offer a second refund kick in the first half of 2004.

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But a glut of spending and tax-cutting has some economists worried that federal borrowing to cover the budget deficit -- which could balloon to 4.3 percent of GDP in 2004, according to the Congressional Budget Office -- will compete with increased private borrowing, pushing interest rates higher -- a process called "crowding out."

"Crowding out could become a distinct possibility in the future, pushing up interest rates significantly in 2005 and beyond," said Sung Won Sohn, chief economist at Wells Fargo & Co.

On the other hand ... so what?

Other economists hope stronger growth will raise tax revenue, keeping the budget in check. Others argue that the government has run enormous budget deficits before, without crippling the economy.

On the one hand ... the trade gap could lead to a dangerous dollar correction

Another deficit, the international trade gap, also raises constant concern on Wall Street. That gap has swollen in recent years, as America borrows more than a billion dollars a day from overseas to support its extravagant lifestyle.

The fear is that foreign central banks, who buy dollar-denominated assets to pump up the dollar and keep their own currencies low, will tire of this relationship and kick out the stops, causing the dollar to plunge, potentially crippling U.S. stock prices.

"That's the big lingering risk factor sitting out there on the horizon," said Lehman Brothers chief economist Ethan Harris. "Will we have a gradual adjustment, where the trade deficit gradually improves, or will we have an accident along the way?"

On the other hand ... not any time soon

Many economists doubt the correction will be painful, however. Central banks -- especially those in Asia, which benefit from a strong dollar -- have every incentive to keep propping it up.

A stronger economy could also encourage private foreign investors to buy American assets, with the hope of greater returns.