The U.S. economy may end 2011 growing at its fastest clip in 18 months as analysts increase their forecasts for the fourth quarter just a few months after a slowdown raised concern among investors.
Economists at JPMorgan Chase & Co. (JPM) in New York now see gross domestic product rising 3 percent in the final quarter, up from a previous prediction of 2.5 percent. Macroeconomic Advisers in St. Louis increased its forecast to 3.2 percent from 2.9 percent at the start of November, while New York-based Morgan Stanley & Co. boosted its outlook to 3.5 percent from 3 percent.
“The incoming data on consumption, business spending and residential investment all point to GDP growth in the fourth quarter tracking 3.3 percent,” said John Herrmann, senior fixed-income strategist at State Street Global Markets in Boston.
Herrmann, who is the second most-accurate forecaster of GDP based on Bloomberg data, had been looking for fourth quarter growth of 2.4 percent at the start of this month. The economy expanded at an annualized pace of 2.5 percent in the third quarter.
German Stocks Drop for Fifth Day Amid Franco-German Spat; Infineon Falls
German stocks retreated for a fifth day, the longest streak of losses in almost three months, amid revival of a Franco-German dispute over the European Central Bank’s role in tackling the debt crisis.
Infineon Technologies AG (IFX) and Aixtron SE followed a selloff in European technology shares. ThyssenKrupp AG (TKA) and Salzgitter AG (SZG) dropped with metal prices. SGL Carbon SE (SGL) surged 5.4 percent after Bayerische Motoren Werke AG (BMW) bought a stake in the maker of carbon and graphite products.
The benchmark DAX Index lost 0.6 percent to 5,818.25 at 12 p.m. in Frankfurt. The gauge has fallen 4 percent this week as yields on Italian and Spanish bonds climbed, and the cost of insuring against losses on the nations’ debt rose to records. The broader HDAX Index also slid 0.6 percent today.
Crude Oil in New York Heads for Worst Weekly Performance Since September
Oil rose in New York as the euro’s rebound fueled optimism that European leaders may be able to come to an agreement on how best to combat the debt crisis that threatens the region’s economy.
Futures rose as much as 0.8 percent after dropping 3.7 percent yesterday. The euro strengthened 0.6 percent against the dollar while Italian and Spanish lending costs declined following reports the European Central Bank bought the nations’ securities. New York crude is up 0.7 percent this week.
“The Italian bond spreads are narrowing,” said Thina Saltvedt, an analyst at Nordea Bank AB in Oslo. “That gives some confidence to the market and pushes up the prices of oil.”
Crude for December delivery on the New York Mercantile Exchange rose as much as 82 cents to $99.64 a barrel and was at $99.63 at 9:32 a.m. London time. The contract, which yesterday dropped $3.77 to $98.82, expires today. The more-active January contract gained 81 cents to $99.63.
