Ian Shepherdson Quarter Quotations

Overall, solid domestic final demand, but the second quarter will be much weaker. We expect growth to slow to 3% or less, led by a sharp slowing in consumption.

This report does not change the big picture, but it lifts the starting point for growth in both the first quarter and 2003 as a whole; good news,

This will doubtless shock the markets, and makes an October rate cut more likely, but it does not change the outlook for a near-term recovery, ... Falling employment, rising unemployment lag activity. These numbers reflect the second quarter economic stall.

We expect further gains over the next couple of months in the wake of the plunge in gasoline prices. If we're right, the data will signal first quarter consumption growth of the order of 4 percent.

The renewed strength in home sales reflects lower mortgage rates; we expect rates to dip to a 14-month low this week. The housing rebound will ensure construction sector strength in the first quarter of 2001. No recession here.

This jump in inventories will marginally lift second quarter GDP growth expectations. We look for growth of between 2.5 percent and 3 percent, with inventories adding some 0.75 percent.

Inventories remain very low and will add to third quarter and fourth quarter growth, too.

The details are close to our expectations, though consumers' spending, up 5.5%, was a bit stronger than we expected. Overall, solid domestic final demand, but the second quarter will be much weaker.