U.S. GDP Soared by 6 Percent in the 1st Quarter

There comes a prospect that the growth rate of U.S. Gross Domestic Product (GDP) in the 1st quarter (January to March) will reach 6 percent, as business is recovering with industrial product increasing by 0.2 percent in January and 0.4 percent in February.

As enterprises employ more new hands and private consumption expenditure, which takes two thirds of economic activity, is likely to increase, optimistic view that `it is like the best season of late 1990s with boosted economic growth and low inflation` is getting influential.

▽prospecting growth rate of GDP adjusted upward = U.S. security giant Merrill Lynch forecasted the growth ratio of U.S. GDP in the 1st quarter to be 6 percent. Merrill Lynch chief economist Bruce Steinberg raised the forecast of growth rate much from -1 percent four months ago, and 3.5 percent early this year. He explained, “enterprises increased the stock for January after 12 months anticipating rise of demand, and both capital and consumption expenditure increased. ”

Salomon Smith Barney chief economist Steven Wieting raised his fourth-quarter GDP estimate from 1.0 percent to 3.5 percent and then finally to 5.2 percent. Growth rate of GDP in the fourth quarter last year was 1.4 percent.

Economic news media Bloomberg reported, “average estimate of first quarter GDP is recent 2 years high 4 percent. It is considerable change from -0.1 percent, their estimate in December last year. ”

▽ Employment of new hands increased = Consulting company William M Mercer said that 70 percent of enterprises are likely to employ new hands and 50 percent executives during the first quarter, while 40 percent of enterprises froze hiring and gave the shakes in the last year.

USA Today quoted the survey of consulting company Accenture that 20 percent out of 1000 companies chosen by economic magazine Fortune are likely to employ over 1,000 persons this year.

USA Today said that companies are increasing employment as U.S. business is recovering, but the employment might be the change of employment strategy to selectively rehire the employees temporarily dismissed last year.

▽active advertisement and going public = The expenditure for advertisement last year decreased by 9 percent from the previous year, most shrunk since Great Depression.

However, advertisement market this year is on the recovering, as American Express began media ads amounting 100 million dollars, and the ads of new products of Berger King and Tropicana appeared.

UBS Warburg media analyst Leland Westerfield altered his ad growth estimate of 1 percent this year from 2 percent decrease. U.S. online research company IPO.com said, “36 companies` stocks were listed this year, and 4 companies will list stocks of 6.1 billion dollars this week. Going public stopped shrinking due to economic recovery. ”

Jung-Ahn Kim konihong@donga.com · credo@donga.com