Richard Berner and David Greenlaw of Morgan Stanley think 2004:III US GDP growth is going to turn out just peachy.
The economy has shown clear signs of rebounding from the spring �soft patch� in growth, and we now estimate that GDP advanced by 4.6% annualized in the quarter just ended.Remember that 2004:II growth was 3.3% and 2004:I, 4.5%. This level of growth, in light of the mediocre retail sales figures for both July and September and a downright gloomy August, can only mean a quarter driven heavily by capital investment and housing. But capital investment to create products that no one will buy. And houses built for the most financially borderline homeowners financed by adjustable rate mortgages.
Still two-and-a-half weeks to wait for the advance numbers on third quarter GDP, but I'll be mighty shocked if it comes in at 4.6%.