Blue Chip consensus forecast for real gross domestic product (GDP) has risen to +2.8% for 2002 compared to just 1% last December. Still, Blue Chip points out that forecasters have generally lowered their GDP growth outlooks for quarters two through four in order to accommodate the unexpectedly strong first-quarter performance. The retrenchment, Blue Chip reports, "appears to stem from a reduction in optimism about the pace of recovery in capital spending, signs of a faster-than-expected widening of the trade deficit and growing signs of a pullback in the pace of residential investment."

Ratio of inflation hawks to doves is about 1:5 at present. A few commodity price run-ups—however dramatic—do not typically lead to an economy-wide inflation. Economists say very strong productivity growth and a decided reluctance among businesses to resume hiring will serve as powerful counterweights to any inflationary pressures building in the commodity price realm at this time. What's more, they say deflation overseas (especially in China) will create price competition—both international and domestic—for U.S. producers. The dollar needs watching, however. A sustained slide would serve to shore up pricing power among domestic producers.

The U.S. Future Inflation Gauge (USFIG) from the Economic Cycle Research Institute (ECRI, New York) is still averaging below zero on a year-over-year basis, indicating a lack of general inflationary pressures in the U.S. economy. That said, it's important to note that the rate of change in the USFIG hit a low point last August (-18.2%) and has been climbing steadily toward zero (-4.1% at latest read) ever since.

Early data returns suggest there was no slowing of consumer spending in second quarter 2002. In fact, retail sales figures for April all told, it looks like consumer spending is on track to rise at least 3%, if not closer to 4%, in Q2 2002.

Last call for Crystal Ball! To enter PURCHASING Magazine's 2002 Crystal Ball economic forecasting competition, go to www.purchasing.com. Deadline for entering is midnight on June 30, 2002. Prizes: $500 for first place, $150 for second, $100 for third. Previous winners can enter, but can claim no prize money. If there's a tie in the scoring, earlier time stamp wins. PURCHASING's Web location also features links to data sources necessary for formulating forecasts. Tip: Final revision to Q1 GDP data will be out on June 27.