Blue Chip Economic Indicators – a monthly report of the financial outlook for the US according to 52 economists – has increased its forecast for economic growth this year from 1% last month to 1.5%.
Though well down on expansion in the late 1990s (typically around 4%), the forecast is more optimistic than that given by the US government. In last week’s budget announcement, the Office of Management and Budget predicted just 0.7% economic growth, while the Congressional Budget Office expects only 0.8%.
Key to rising expectations are the rapidly shrinking inventories recorded for the end of last year – the Commerce Department revealed Friday that they had fallen for the seventh successive month in December. Such data are important because, if inventories fall, production may have to increase to keep up with consumer demand, prompting growth.
Data sourced from: Wall Street Journal; additional content by WARC staff