Rebound Realities

History suggests 2011 will disappoint

By Stephen Gandel Monday, June 27, 2011

    • Federal Reserve Chairman Ben Bernanke expects the economy, which has slowed lately, to rebound in the second half of the year. He's not alone. In a recent poll, forecasters predicted U.S. GDP will grow 3.4% in the second half of 2011, nearly double the rate of the first three months. How likely is that? Not very.

    Since 1951 the economy has grown 20% faster in the first half of the year than in the second. Of course, 2011 could break the trend. The economy has been dealt a hazardous mix of Japan's nuclear disaster, Middle Eastern unrest, the U.S.'s extreme weather and high gas prices. The result: GDP grew just 1.8% in the first quarter. Other economic indicators remain weak too.

    Still, luxury retail numbers are up, raising hopes that the richest Americans (who account for more than 50% of consumer spending) could shop the U.S. to recovery. That would take a lot of shopping: to hit those optimistic GDP estimates, the economic-growth rate would have to double in the second half of the year. How often has that happened? In the past 60 years, 12 times. Bottom line: expect more disappointment.