Business inventories were run down to nearly nothing in the first quarter, and were set for a rebound. There also is no sign that consumer spending is about to veer off its recovery path, especially with the job market gradually improving. All of that is likely to underpin better economic growth.
The question is by how much. Growth in the current quarter is forecast to be anywhere from 1.4 percent to 6 percent, according to a Reuters survey of 75 economists taken last week. That is the widest forecast range for U.S. economic growth in all Reuters polls in four years, except for one survey last April.
Typical gauges of uncertainty in financial markets tell a different story. The CBOE Volatility Index touched its lowest in over a year last week. All the while the S&P 500 has been hitting record highs almost daily, which at face value doesn’t give the impression of a lot of doubt about the recovery.
Digging a bit deeper into the numbers, the range of forecasts for Q2 growth is significantly narrower among those who came the closest to getting it right for Q1. That goes from 2.7 percent to 4.2 percent, with the Reuters consensus nearly bang in the middle at 3.5 percent.