Modest And Unpredictable U.S. Recovery, Says Wake Forest Economist

ByJohn S. McClenahen Compared with the economists now scrambling to boost their 2002 growth projections for the U.S. economy, Gary L. Shoesmith, director of the Center for Economic Studies at Wake Forest University's Babcock Graduate School of Management, is bearish. He's predicting just 1.4% inflation-adjusted GDP growth this year. "During the next few quarters, even if the economy is generally on an upward trajectory, real GDP growth may flip from positive to negative and back again depending on whether the impact from inventory rebuilding outweighs the drag on the economy from autos and housing," Shoemaker says. Inventory reductions shaved 2.2% off real GDP growth during the final quarter of 2001, he figures, and the rebuilding of inventories from current low levels could boost production, although, Shoemaker emphasizes, not in a predictable pattern.