It's strange that on a day when the White House is officially lowering its estimate for economic growth this year, new trade figures show growth to be more robust than previously thought. First the slowdown:
The White House on Wednesday lowered its forecast for economic growth this year even as it slightly upgraded its outlook for unemployment.
Under the administration's new forecast, gross domestic product, or GDP, will grow by 2.3 percent as measured from the fourth quarter of last year to the fourth quarter of this year. That's down from a previous projection of 2.9 percent.
The main reason for the downgrade: The first three months of 2007 got off to an extremely weak start. Economic growth at that time had skidded to nearly a halt, increasing at a rate of just 0.6 percent, the worst showing in more than four years.
The news of the rebound is from the Financial Times, and it's directly linked to strong export growth :
Global demand for US exports helped shrink the country’s trade gap in April in a strong sign that the American economy is picking up speed.
The trade deficit fell by more than even the most optimistic Wall Street economists were expecting and prompted many to upgrade their forecasts for economic growth in the second quarter...
Bruce C. Kasman, chief economist at JPMorgan, said he was raising his forecast for growth in the second quarter to 4 per cent from 2.5 per cent after an expansion of only 0.6 per cent last quarter.
The Economist -- in an article dated yesterday -- speaks about 2.5 percent growth in the second quarter, and notes that exports may be expected to rebound quickly (as they apparently have done), even as the housing market remains disappointing.
It sounds as if the remainder of 2007 may see relatively strong growth. Of course, with the unemployment rate currently around 4.5 percent, there's not much room for it to get better.