August 29, 1997

The Commerce Departments revised second quarter GDP figure, showing the economy expanded at a 3.6% pace, much faster than the previously reported 2.2% rate, comes as little surprise. Recent economic indicators, particularly the business inventories and international trade figure pointed to faster growth, and still do. Interestingly, our initial forecast for the second quarter was for a 3.9% expansion rate. Commerce's first second quarter reading surprised us, the revision didn't. As the graphics show, our estimates for future GDP growth are bullish, with the quarterly growth rate increasing to 3.7% by year end, and slowing next year to an annual rate of about 3.0% - with less growth as the year progresses.

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