U.S. Economic & Interest Rate Outlook

Before we get started, let’s get the forecast update out of the way. With the release of November business inventories data, we have revised up significantly our real GDP annualized growth rate for Q4:2009 – from last month’s projection of 3.5% to 4.5%.

Before we get started, let’s get the forecast update out of the way. With the release of November business inventories data, we have revised up significantly our real GDP annualized growth rate for Q4:2009 – from last month’s projection of 3.5% to 4.5%. Again, it is a sharp slowing in the rate of inventory liquidation that is driving this upward revision. Our projection of the annualized growth rate for final sales in Q4:2009 is 1.6%, just one tick above Q3’s reported growth. So, the anticipated surge in top-line fourth-quarter growth is largely an inventory story. Unless, however, final demand begins to grow faster, the inventory story of the last year’s fourth quarter will be a one-off event.

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