SPENDING, NOT THE ECONOMY:

Up, Up And Away: What economic indicators are saying (Brian S. Wesbury and Robert Stein, 03.16.10, Forbes)

Late last year, when the consensus expected an anemic recovery of 2.8% real GDP growth in the second half of 2009, we laid out a case for a growth rate of 4.7%. In the end, real GDP grew at a 4.1% rate in the second half of 2009 (5.9% in the fourth quarter) vindicating our optimism vs. the consensus.

Now the consensus is forecasting a growth rate of 2.7% for the first half of 2010. In contrast, we are predicting 4.5%, with faster growth in the second quarter than the first. The tilt toward Q2 is due to unusually harsh winter weather across much of the country.

The consensus is still underestimating the resilience and robustness of the U.S. economy and remains stuck on expectations of a "new normal." But productivity is strong, monetary policy is (and will continue to be) easy, inventories are razor-thin and corporate profits are growing rapidly.

And that's assuming the UR does nothing on free trade and immigration.

Posted by Orrin Judd at March 16, 2010 5:56 AM