Based on 55 mainstream economists surveyed in July, they expect the GDP grows 1.9% on average for Q2, 3.1% for Q3 and Q4 this year. Market expects the Q2 grew at 1.7%. The followings are the forecasts based on my models for the U.S. economy:
My Predictions Average Projections By 55 Economists
Q2: 1% 1.9%
Q3: -3% 3.1%
Q4: -5% 3.1%
We are going to see the answers shortly after BEA reports its preliminary Q2 GDP growth tomorrow.
The business inventory continued to expand in March with about 1% growth rate. This spells a heathy economic growth during that period of time. But as I have said many times, this growth is powered by the inventory, not by the consumer demands. we can further relate this inventory growth to the QE2. It is the QE2 that is behind this non-consumer driven economy.
The reverse head and shoulder formation is complete and the neckline has been broken for the Dow 30. I expect the market will be bullish at least in the next couple of months without major correction. The price target should have the same distance from the neckline as that from the head to the neckline.
Together with the major indexes, the commodity prices should keep up making new highs, especially for the gold and silver. The crude oil will also make multi-year high, pushing up the gasoline price, hurting consumer spending and lifting production costs of the businesses as the consequences which will drag the U.S. economy back to recession in the second half of 2011 in my opinion.
The U.S. dollar should keep on the downward momentum until the major markets reverse.