Economy May Grow More Than Predicted, Journal Says

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conomists predicted U.S. economic growth would be higher than previously expected in the second half of this year, the Wall Street Journal reported Monday.

The higher forecasts followed Friday’s reports of a higher-than-expected gross domestic product annual rate of 3.4% in the second quarter, the Journal said in a front-page story.

But while that figure marked a slowdown from the first quarter rate of 3.8%, it was due in part to businesses aggressively cutting inventories, the paper reported.

Second-quarter cuts in production could leave retailers and manufacturers in a position to ramp up production in the third and fourth quarters, the Journal said.

The paper noted that consumer spending grew at a robust 3.3% annual rate, while business investment also rebounded following a down first quarter.

It cited economists from different organizations, such as Morgan Stanley, who raised their third-quarter growth outlook to as high as 5%, from an early July prediction of 3.7%.

Other economists also ramped up their forecasts, which were up from a 3.5% average level projected by 56 economists surveyed by the paper in early July.

An additional half-percentage point in economic growth sustained over a year would yield $60 billion in economic activity, the Journal reported.