Today’s fourth-quarter report on GDP reminds that pessimism is a risky sport when it comes to forecasting America’s economic outlook.
Annualized real GDP grew by 3.5% at an annual rate in the last three months of 2006, the government reported this morning. The pace was surprisingly strong for Mr. Market and the legions of dismal scientists who watch the economy for a living. The consensus prediction called for 3.0% growth, according to TheStreet.com.
Expected or not, 3.5% growth is impressive. That’s the fastest pace since the red-hot rise of 5.6% in 2006’s first quarter. More importantly, the 3.5% pace of 4Q 2006 came in a quarter that was widely said to be marred by the real estate correction. So said Larry Kantor, a managing director and co-head of research at Barclays Capital, in New York this morning. Your editor just happened to be at a press conference at the firm this morning when the GDP news arrived. Reflecting on the update, Kantor said that the drag on the economy in the recent past was hardly devastating.