By John S. McClenahen Merrill Lynch & Co. clearly underestimated the pace of the U.S. economy in the calendar quarter just completed. Later this month, the U.S. Commerce Department will likely report that GDP grew at an annual rate of about 6% in the third quarter. Merrill was looking for 4%. But the New York-based securities firm is sticking with its forecast for 3.5% GDP growth in 2004. "It's an election year after all, and only once in the past four decades did the economy perform poorly as the political pork-barreling came to the fore," notes David A. Rosenberg, Merrill's chief North American economist. "The bad news," however, "is that 3.5% growth is still not enough to narrow the output gap and put a dent in the unemployment rate," he cautions.