Wall Street raising first-quarter growth forecast
WASHINGTON (MarketWatch) - A handful of Wall Street firms bumped up their forecasts for first-quarter U.S. growth on Friday after a sharp increase in consumer spending, setting up perhaps the biggest gain in gross domestic product since the end of 2011. Macroeconomic Advisers raised its GDP estimate to 3.5% from 3.2%, Barclays upped its target to 3.3% from 2.5% and Capital Economics raised its projection to 3% from 2%. If growth comes in at the high end of that range, it would mark the biggest increase in GDP since the fourth quarter of 2011, when the economy expanded at an annual 4.1% rate. The catalyst for the updated forecasts was an acceleration in consumer spending in February. Spending jumped 0.7% and the increase in January was revised up to 0.4% from 0.2%. Consumer spending accounts for more than two-thirds of the U.S. economy and is the main engine of growth. The MarketWatch survey of economists now estimates that the U.S. grew at a 2.5% clip in the first quarter, but that number is likely to be revised higher.