With the U.S. economic data coming in increasingly positive, economists have been forced to raise their forecasts for GDP growth.In the wake of today’s bullish retail sales report, Deutsche Bank’s Joe LaVorgna has raised his estimates. Here’s a summary:
- Q1 2013: +3.0 per cent (from 1.5 per cent)
- Q2 2013: +2.3 per cent (from 2.0 per cent)
- Q3 2013: +3.0 per cent (from 2.5 per cent)
- Q4 2013: +3.5 per cent (from 3.0 per cent)
- 2013: +2.3 per cent (from 1.7 per cent)
Here’s an excerpt from LaVorgna’s note where he explains why:
The forecast adjustment was due to three developments: One, last week’s net exports data for January showed stronger than expected exports. The improvement in exports has been corroborated by the ISM survey, which showed further noticeable improvement in February. Two, February retail sales surprised significantly to the upside, and there were upward revisions. Notably, this was despite tremendous headwinds from the payroll tax hike, slower refunds and rising gasoline prices. March retail sales should get a boost from an early Easter Holiday (March 31) and a faster disbursement of refunds. The upshot is a much faster pace of Q1 consumption than what we had been forecasting, +2.5% currently versus +1.5% previously. This accounts for about half of our Q1 upward revision. Three, inventory restocking is progressing at a faster pace than what we had envisioned—this week’s January business inventories were up +1.0%, and we also had upward revisions.
Lavorgna also reminded us that durable goods orders, ISM surveys, employment, and housing have all been stronger than expected.
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