Thursday, August 30, 2007

Second-Quarter U.S. Growth Probably Stronger Than Estimated

The U.S. economic rebound in the second quarter was stronger than previously estimated as exports surged and business spending grew, economists said before revised government figures today.
The economy expanded at an annual pace of 4.1 percent, the most in more than a year, according to the median estimate of 81 economists surveyed by Bloomberg News. The Commerce Department last month calculated the growth rate at 3.4 percent.

The outlook for the second half of 2007 has soured in recent weeks as the subprime mortgage crisis has restricted access to credit. The Federal Reserve this month said risks to growth had ``increased appreciably'' and economists at JPMorgan Chase Corp. and Lehman Brothers Holdings Inc. are among those that have reduced forecasts.

The second quarter ``will be the strongest quarter of the year by far,'' said Stuart Hoffman, chief economist at PNC Financial Services Group Inc. in Pittsburgh. `` I don't see growth topping 2 percent'' through early 2008.
These growth numbers are good but the third and fourth quarter should be much less. how much less is yet to be determined. I have said the US economy will slip into recession later this year or early next. These strong numbers have me rethinking that prediction. I would be very happy to be wrong since a recession will be most damaging for the poor and middle class.

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