“GDP Growth in the First-quarter to 4 Percent,” U.S. Economists Boost GDP Forecasts

U.S. economists are rushing to ratchet their economic forecasts higher as favorable data keeps following in.

The Blue Chip Economic Indicators announce on Sunday that the first-quarter gross domestic product (GDP) is expected to a gain of 2.6 percent, up a full percentage point from the 1.6 percent rise predicted in February in its newsletter based on a survey on 100 economists` forecasts. The consensus projection for second-quarter GDP was a gain of 3.2 percent. GDP was seen growing by 3.7 percent in both the third and fourth quarters.

The Blue Chip also said that a sizable number of analysts have begun to speculate that a substantial reduction in the pace of inventory liquidation could propel GDP growth in the first-quarter to 4 percent.

In relation to this, the AFP reported on Sunday that Larry Lindsey, George Bush`s economic adviser, said, “Due to the strong consumption and strong inventory investment, the U.S. economy is going to do very well in the first half of the year, and the chances of a `double-dip` recession had faded,” in his interview with the Sunday Times, a British newspaper.

Hye-Yoon Park parkhyey@donga.com