“The U.S. economy is on track to grow faster in the current quarter than any time since the second quarter of last year, though several risks—including a possible meltdown in Europe—are clouding the outlook.
In recent days, a number of economists have increased estimates for fourth-quarter growth, pointing to stronger-than-expected readings on trade, consumer spending and other gauges. Forecasting firm Macroeconomic Advisers on Friday raised its estimate to 3.7%, from 3.5%, while Goldman Sachs has raised its target to 3.4% from the 2.5% it was predicting two weeks ago.
This pace of growth is much stronger than economists were expecting a few months ago, when Europe’s sovereign-debt problems started getting worse. … The stock market has made up much of its losses, although new worries about Europe sent indexes lower Monday, and consumer sentiment has improved, prompting consumers to dip into savings and continue spending. Companies are not only selling more, they’re restocking shelves when they become too lean. Retail sales rose 0.5% in October and were up 7.2% from the same month last year, according to the Commerce Department.”
U.S. economic data are outperforming expectations by the most in nine months, a trend Federal Reserve officials may incorporate into their policy statement (Tuesday).
The Citigroup Economic Surprise Index, a daily measure of whether economic data is better or worse than economists’ projections, improved to 85.7 on Dec. 2, the highest since March 9, after the Labor Department reported an unexpected drop in the jobless rate. The index is calculated on a three-month rolling basis and weighted for the importance of the indicator.
“Most of the economists are missing the underlying strength” in the world’s largest economy, said Joel Naroff, president of Naroff Economic Advisors, Inc. in Holland, Pennsylvania.