Photo: Courtesy of Credit Suisse
Credit Suisse maintains a bullish outlook for the U.S. economy, with 3.4% growth in 2011 accelerating to 3.8% in Q4.Consensus estimates are for 2.6% growth.
However, emerging markets head strategist Andrew Garthwaite said there is a strong risk of the economy outperforming, in a note published on Jan. 18. Garthwaite’s “surprise” scenario is 5% GDP growth in the first half of the year, accompanied with a dollar trading at 1.2 against the euro.
Garthwaite names five reasons the economy could surprise you:
- The recovery itself has not been abnormally weak (GDP has risen 3.7% from trough), but it has been abnormally weak compared with the decline in GDP growth that preceded it (4.1%)
- In general, capex growth explains around 60% of GDP growth variance—and capital spending indicators are consistent with 10%+ capex growth.
- The US labour market recovery is gaining momentum
- Lending conditions are improving
- Our weekly lead indicator of US growth is still accelerating