Goldman’s Jim O’Neill: Here Are 4 Reasons Why US Economic Forecasters Should Be Cheerier

goldman jim o'neill
Jim O’Neill

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Jim O’Neill, Chairman of Goldman Sachs Asset Management, is out with his latest Viewpoints From Jim O’Neill letter.Titled A Shifting Mood?, his letter discusses how things have been looking a bit rosier in the U.S. lately.

However, by his measure, the consensus estimate for U.S. GDP growth is a bit conservative.

Here’s an excerpt from O’Neill’s letter where he lists four bullish trends in the U.S. economy:

I have talked in many Viewpoints since last August that I thought the US recovery would be stronger than people realised. Most of the additional data being published gives fresh support to this view. A renewed drop in weekly job claims and some further better-than-expected housing data occurred this week. These releases coincided with more signs from the business world and beyond that the economy may be improving. Four different areas pricked up my ears. The first is repeated evidence of a pick-up in commercial bank lending from their Q4 results and, with it, the reported money supply from the Fed. The second is a changing mood about the housing market, in addition to a better tone of some of the data. Third, there is a lot of growing marginal evidence about US manufacturing becoming more competitive, including another interesting story in the US edition of the FT on Wednesday. And fourth, there is considerable talk about the rapidly-improving domestic energy supply situation in the US which, in itself, is helping boost the domestic industrial plans of some of corporate America. All four of these items were things I suspected were happening, but it was quite refreshing to hear so much talk about them.

About the only thing left to sort out is the staggering amount of wasted time one encounters going through passport control at JFK these days…

I continue to believe that the consensus on the 2012 US outlook needs to get a bit cheerier since most professional forecasters have not yet captured this mood. There is a view that much of the improvement has been seasonal. While possible, I have increasing anecdotal evidence and belief to suggest it is more. We are still forecasting 2.5 pct real GDP for 2012 at GSAM, which is above consensus.

SEE ALSO: Jim O’Neill Presents His 11 Predictions For 2012 >