“After dipping below 1 percent in the first quarter, real GDP already appears well on its way to exceed 3 percent in the second quarter — a little above its trend rate,” says Diane Swonk, chief economist of Mesirow Financial, in her June edition of Themes on the Economy. “A dramatic drawdown in inventories, in particular, left production with nowhere to go but up. Even automakers, which have been draining inventories for a year, are now scrambling to restock dealer lots.”
Mesirow Financial’s June edition of Themes on the Economy is available here
“The question, of course, is whether or not second-quarter gains can be maintained,” Swonk says. “Recent data, however, is encouraging. Consumer confidence improved in May, despite a $1-per-gallon surge in gas prices, and orders for new equipment continued to show decent gains in April.”
In her June newsletter, Swonk takes a closer look at the outlook for a rebound in Real GDP growth in 2007 and into 2008, and its implications for an inflation-conscious Fed, and assesses the risks to the forecast.