Analysts Expect Downward Revision To Second-Quarter GDP

By John S. McClenahen On July 31 when the U.S. Commerce Department releases its preliminary estimate of U.S. GDP growth between April and June the figure is likely to be less than the 3% many economists were expecting just a few weeks ago. Two reasons: less-than-expected inventory building and a greater-than-expected U.S. international trade deficit. Specifically, May's trade deficit of $37.6 billion, a monthly record, was "substantially worse than we had anticipated," notes Maury Harris, chief U.S. economist at UBS Warburg LLC, New York. He has lowered his forecast for second-quarter GDP to 2% from 3%. Meanwhile, Bruce Steinberg, chief economist at Merrill Lynch & Co., New York, also has lowered his GDP forecast by a percentage point -- to 2.5% from 3.5%. Nevertheless, Steinberg expects GDP growth during the second half of this year to accelerate to about a 4% annual rate.

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