Dwight Asset Management

The recovery that took hold in the 2nd half of 2009 should be sustained. After declining by 2. 4% in 2009, real GDP is likely to rise by 3. 5% in 2010. Our above-consensus forecast reflects current and lagged effects of colossal monetary and fiscal stimulus coupled with an appreciable improvement in the underlying economy. To get to our 3. 5% real GDP forecast, we're assuming that final sales growth contributes about 2. 5 percentage points to GDP growth and inventory rebalancing contributes a point. At this point, we think risks are weighted to the upside for both of these forecasts.