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Thursday, June 9, 2011

Wells Fargo’s Monthly Economic Outlook – June 2011

- While our forecast calls for real GDP to rise at a 2 percent pace during the second quarter, the composition should be improved, as real final sales are expected to strengthen to a 3.3 percent pace from the 0.6 percent pace during the first quarter.
. Growth during the third quarter is expected to accelerate, as the Japanese earthquake led to supply shortages at a number of vehicle assembly plants, and a string of tornadoes and floods along the Mississippi River likely cut into job growth during the second quarter.
- We expect real GDP to rise 2.4 percent in 2011 and at a 2.6 percent pace during 2012, below the latest Blue Chip Consensus of 2.6 percent and 3.1 percent, respectively.
. Our longer-term outlook for 2012-2014 calls for 3.1 percent average growth.
- Subpar economic growth this year will have three main impacts the economy; unemployment will only decline gradually, the Fed will take its time removing the stimulus that it has put in place, and tax revenues will not grow fast enough to avoid the need to cut spending.

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