Home >> United States & Canada >> Economics & Trade  Email  Print Economy Gaining Steam: Dow Headed for 14,000 Prof. Peter Morici - 4/28/2007 Wednesday morning the Commerce reported durable goods orders were up 3.4 percent in March. Excluding transportation equipment orders were up 1.5 percent, and excluding defense purchases orders were up 4.5 percent.
Capital goods orders for business use were up 8.2 percent overall, and 11.7 percent excluding defense.
This is a very strong showing, indicating business investment is poised to power stronger growth in the second half of 2007. GDP growth should post at less than 2.5 percent the first half but pick up to 3 percent or better in the second half, if the Federal Reserve can resist the urge to raise interest rates.
Pushed by gasoline and other energy prices, inflation will remain worrisome. However, raising interest rates cannot affect international oil prices or shortages of refinery capacity. If the Federal Reserve keeps its foot off the break, the economy and stock market will do nicely through the end of the year and into 2008.
Look for the Dow to break 1400 by year end or in early 2008. Peter Morici is a professor at the Smith School of Business, University of
Maryland School, and former Chief Economist at the U.S. International Trade
Commission.
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