numbers.....

I thought maybe I should try to spell out the reason for my GDP prediction. Here's my train of thought. (If I'm wrong, I'll want to look back at this to see where I went wrong.)

GDP growth for the first quarter was at a 5.6% annual rate, so it was 1.4% for the quarter. According to Shadowstats.com inflation rose at a 6.6% annual rate and a 1.6% rate for the quarter. GDP is adjusted for inflation, but the official rate of inflation is only 3.3%. This will boost GDP numbers. Wall Street's forcasted annual rate of GDP growth of 3% would require a quarterly rate of 0.1%. Corporate earnings were very strong, in large part thanks to passing inflation along to customers (oil companies, etc.). My forecast of 4% would require quarterly growth of 0.6%.

In conclusion, I am almost tempted to raise my forecast to 5% (quarterly growth of 0.9%). As long as GDP is keeping up with inflation, the costs can be passed along safely. However, the housing numbers were even worse today. That's 20% of the economy slowing down sharply.

So, I'll stick with my forecast of 4%.