This is higher than most forecasters expected. The Ways and Means Committee staff's February forecast was 1.5 percent. While the nation has clearly been in a manufacturing recession, the Purchasing Management Index rose in April for the third month in a row. This may signal that January 2001 was a bottom for the manufacturing sector. Short-term interest rates have continued to decline.
Inflation appears to be under control.
The stock market rebounded in April. The Securities Industry Association estimates strong bond underwriting for the first quarter of 2001. U.S. new Home Sales and existing Home Sales both increased over four percent in March, as low mortgage rates have more than offset the drop in consumer confidence in recent months. However, while consumer spending is still growing at a healthy pace, U.S. unemployment inched up to 4.3 percent in March, and U.S. Consumer Confidence Index is down in April. Also, Corporate profits fell 4.3 percent in the fourth quarter after growing 0.6 percent in the third quarter of 2001.