Economists at JPMorgan Chase (NYSE:JPM) upped their fourth-quarter economic forecast for the U.S. economy, citing Tuesday’s retail sales report and other recently-released positive economic data.
In a note, JPMorgan chief U.S. economist Michael Feroli said he now expects fourth-quarter GDP to come in at a 3.5% annualized growth as compared to his previous estimate of 2.5% growth.
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In Tuesday’s retail sales report, the Commerce Department said retail sales rose by a better-than-expected 0.8% in November – a strong early sign for the important holiday season.
Feroli said with Tuesday’s retail sales report combined with back revisions, JPMorgan now expects U.S. consumer spending to come in at a 4% annualized pace. The new consumer spending report adds an effective 0.5 percentage points to the new GDP forecast, Feroli said.
The retail sales report is combined with other recently positive economic data, including business inventories
He also now expects that the first half of 2011 will be running a stronger pace that previously anticipated.
“We think the strength in the consumer can be sustained,” Feroli said.
For his full-year economic forecast, Feroli expects the U.S. economy to grow at a 2.9% annualized rate. That type of growth would during regular economic periods be quite respectable but during an economic recovery GDP should be considerably higher in order to produce the type of mending the national economy needs.