U.S. manufacturing executives who have remained cautious about capital spending and workforce expansion are looking like better forecasters than economists who have been predicting first-quarter inflation-adjusted U.S. GDP growth would come in well above a 4% annual rate and stay respectability high during the rest of 2005.
"What is interesting is that the slowdown is actually starting now," stated David A. Rosenberg, Merrill Lynch & Co.'s chief North American economist during a conference call on April 13. Merrill's economists, who had been forecasting an annualized GDP growth rate of 4.3% for January through March, now figure growth could be as low 3.5%, just about the long-term potential growth rate of the U.S. economy.
And Rosenberg doesn't see consumer spending giving a boost to GDP growth during the current calendar quarter. "There is absolutely no momentum, nada, being built into consumer spending as we move into" the second quarter, he asserted.