By John S. McClenahen Merrill Lynch & Co., the investment firm whose corporate symbol bull has stood in stark contrast to its decidedly bearish economic forecasts in recent months, is becoming a bit more bullish. The New York-based firm has just raised its GDP growth projections for the third and fourth quarters of this year and all of 2004. Merrill now expects inflation-adjusted GDP to grow at an annual rate of 3.5% during the July-through-September quarter of this year and 2.8% between October and December. Previously estimates were 3% and 2.5%, respectively. For 2004, Merrill is looking for 3.4% growth, one-tenth of a percentage point higher than it previously anticipated and very close the economy's 3.5% long-term annual growth potential. More short-term stimulus than expected from last month's tax-cut legislation and lower long-term interest rates are two factors behind Merrill's growth-rate revisions. But there is a cautionary note, and David A. Rosenberg, Merrill's chief North American economist views the upcoming third quarter as an economic litmus test. "Given all the stimuli in the pipeline . . . if GDP does not come in above 3%, then the downside risk to the economy going forward is large and significant," he says.