Bullish Economic Outlook Report

Economy.com just issued its latest global economic outlook and it sounds good--maybe a little good.

Here is what the outlook has to say: "With the first quarter behind us and an end to the war in Iraq in sight, it is time to consider the nature of the rebound in the global economy expected in the second half of this year. The U.S. is expected to lead the worldwide recovery with a rapid acceleration in real growth during the second half of 2003 that induces stronger growth abroad in 2004."

The revised global outlook has the world economy gaining 0.3 percent this year (2.1% growth rate), which is only half its 0.6 percent growth last year. Business investment is expected to strengthen more than consumer spending throughout the rest of the year.

Business spending is already showing signs of improvement in the United States, which is illustrated by many of the stories in ED Futures this week and last. As we have been saying for sometime, we here at ED Futures foresee a one or two quarter period of catchup growth for companies. Be ready for that time window, because that is when you will see serve business prospects making facility site selection decisions.

In the Euro zone, aggregate investment is still weak, though a recovery is evident in spending on equipment and software. There has been some pickup in Japanese capital spending, which is being instigated by a recovery in export-led manufacturing that occurred during the first half of 2002. Because businesses in Southeast Asia did not over-invest in capacity during the late 1990s and, as a result, they are faced with fewer current disincentives to capital spending at this time. Business spending in Latin America will be mixed, with Argentina, Brazil and Chile showing stronger activity while capital spending in Mexico remains weak until late in the year. Argentina is displaying the most impressive turnaround.

Let's keep our fingers crossed that the War in Iraq will culminate soon so things can settle down across the the world. Clearly, this will be the biggest driver to an economic recovery on all continents.

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