Salient to Investors:

  • The median economist predicts GDP will grow 3.1 percent in half2 2014 and 2015 will be the strongest year in a decade.
  • Ethan Harris at Bank of America sees no major headwinds and forecasts 3 percent growth in half2 2014 on fewer government cutbacks, rising auto demand and increased home sales.
  • Ryan Sweet at Moody’s Analytics said the job numbers indicate the Q1 2014 drop in GDP was an anomaly, and says payrolls will grow by 250,000 a month on average in half2, signalling an accelerating economy.
  • Lynn Reaser at Point Loma Nazarene University said higher grocery and gasoline prices are a risk to the outlook, and predicts 3 percent at best for the rest of 2014.
  • John Silvia et al at Wells Fargo Securities said investment, spurred by improving sales, will help sustain bigger gains in GDP.
  • Greg Valliere at Potomac Research said the economy is recovering quickly everywhere you look, and sees fewer political headwinds with federal government spending levels set through September 2015, the debt limit suspended until March 2015, and lawmakers focused on the November mid-terms.
  • Daniel Clifton at Strategas Research Partners said gubernatorial elections in over half of US states will boost the likelihood that they will take action on projects before November, offsetting federal spending and resulting in no fiscal drag going into half2.
  • Since 1990, the S&P 500 rose an average 8.7 percent in the Q4 of mid-term election years versus a 3.7 percent gain in Q4s in the intervening years.

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