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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: rich4eagle who wrote (253016)	5/6/2002 5:23:19 PM
From: Neocon	Read Replies (1) \| Respond to of 769670

This is what Merrill Lynch has to say: Economic Recovery Roaring Ahead April 1, 2002 Merrill Lynch Chief Economist Bruce Steinberg made these comments about the prospects for economic growth: The economy is outperforming even our optimistic expectations. Accordingly, we've raised our GDP and earnings estimates. We now expect GDP to increase by 4.8% on a fourth-quarter-to-fourth-quarter basis and at a 3.2% rate for calendar 2002. That's half a percentage point above our previous forecast, which was more than a full point above the consensus. Strong growth means that earnings should accelerate. We expect S&P 500 operating EPS for 2002 to jump by 21% to $47.00; our previous forecast was a gain of 15% to $45.00. Looking at interest rates, we don't expect the Federal Reserve to begin tightening until June at the soonest. We think that the Fed funds rate will be 2.75% or 3% by year-end, when the yield on 10-year Treasuries probably won't be much above 5.5%. GDP probably grew at a 6% rate for the first quarter. We don't expect another quarter that strong, but we do believe that solid growth will persist. Right now, we're projecting 4% growth for the next couple of quarters, with a pickup toward 5% for the fourth quarter, when the economy should be firing on all cylinders. For next year, we expect the economy to grow by around 4%. Can growth really be that strong? Keep in mind just how much stimulus was poured into the economy: more than $90 billion has been added to Federal spending so far in 2002. Even after state and local cutbacks, government spending should directly boost GDP growth by more than half a percentage point. In addition, tax cuts have been about $70 billion, which should spur consumer and capital spending. Inventories should also sharply boost growth, adding about 1.5 percentage points to GDP this year. The biggest chunk of that occurred in the first quarter, when inventories probably added more than four percentage points to GDP growth. Further inventory building could boost GDP growth by about half a percentage point a quarter during the rest of the year. The combined effect of inventories and government spending ought to add an average of one percentage point to growth in each quarter through the end of the year. Given that push, the rest of the economy doesn't need to do anything extraordinary to reach our growth projections. That means that growth risks still appear to be to the upside of our outlook. Consumer spending probably rose at a 3% rate for the first quarter. With consumer confidence up sharply, we believe that consumer spending can easily keep up that pace during the next couple of quarters. At the same time, the job market should improve slowly. By the fourth quarter, if not sooner, consumer spending seems likely to be rising at a faster pace. Barring another oil shock that pushes prices above $30 a barrel, consumer-spending risks also seem to be to the upside. askmerrill.ml.com