Quarterly Growth: Down Today, Up Tomorrow?

Economy watchers may get a surprise when first-quarter gross domestic product is revised in a few weeks. Economist Paul McCulley of UBS Securities Inc. says March data suggest the growth rate could be lowered appreciably.

Other things being equal, McCulley estimates that March readings on construction and factory and wholesale inventories point to a downward revision in first-quarter growth from 2.6% to under 2%. Such a revision might calm inflation worries for a while, but the irony is that lower inventories and construction in the first quarter argue for a stronger rebound in the second.

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