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Investing Specialists

This Economy Has Long Legs

Morningstar's Bob Johnson boosts his 2010 GDP forecast to 4.5%.

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Strong mid-month auto sales and good shipping data out of both  FedEx (FDX) and the American Railroad Association were the highlights of this week's economic statistics. More conventional data, including industrial production, consumer and producer prices, and housing starts, were all benign and in line with modest, weather-afflicted expectations.

I strongly believe that the economy is beginning to pick up steam. This will become much clearer when we begin to see March data and some of the weather-affected February data moves into the rearview mirror.

I am now raising my GDP growth forecast for 2010 to 4.5% from my previous estimate of 4%. It now appears to me that real GDP growth in the first quarter is likely to exceed 4% or so overall, with more of the improvement coming from the consumer when compared with the December quarter. Both these figures compare with a general consensus of just 3% for the quarter and the year, and the Congressional Budget Office's forecast of just over 2%.

Robert Johnson, CFA does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.