Merrill Lynch Lowers 2003 GDP Forecast To 2.3%

ByJohn S. McClenahen By the lunar calendar, this is the Year of the Sheep. And U.S. economic growth, according to a revised GDP forecast from New York-based Merrill Lynch & Co., will be more sheepish than earlier expected. The securities firm has just lowered its GDP growth estimate for 2003 to 2.3% from its previous 2.5%. The U.S. economy grew at 2.4% in 2002. "We are not convinced that even a quick resolution to the Iraq file will be the catalyst for a return to more normal self-reinforcing expansion -- even if it generates a brief round of investor euphoria of the likes we saw during the early 1991 Gulf War," says David Rosenberg, Merrill Lynch's chief North American economist. "The bottom line is that it will not be interest rates that ultimately turn the consumer around from here -- it will have to be a revival in business spending and the hiring/income growth that will inevitably follow," Rosenberg contends.