Tuesday, September 21, 2004

Thus sayeth the Organisation for Economic Co-operation and Development.
Growth of the US economy this year is likely to be 4.3 percent, the OECD forecast, lowering an earlier forecast of 4.7 percent.
Everybody and their brother and their brother's in-laws are climbing down from their exceptionally rosy predictions from six months ago, but 4.3% still seems pretty confident in the General's view. After all, 2004:II growth was a mere 2.8%.

If we experience even GDP growth over the next two quarters (an assumption for the sake of simplification), 2004:III growth will have to come in at a blistering 4.9% in order to stay on track for an annual rate of 4.3%. This is even at the top end of the very wide margin that the OECD has given itself, forecasting 2004:III GDP growth in the US to come in anywhere from 2.0% to 5.2% (there's a bold prediction).

Now remember the summer "soft patch". Remember the July trade deficit was the second largest on record. Remember the falling bond rates since June. Remember the weak August retail sales numbers. 4.9%? The OECD economists must not have come home to Paris from their August holidays completely sober.

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