*Extra* Daily Interview: Parsing the GDP Data

A 2% GDP growth rate for the first quarter is excellent news, says Steve Slifer, co-chief U.S. economist at Lehman Brothers. It indicates that inventories are being aggressively worked through, yet it isn't strong enough that it will prevent the Federal Reserve from cutting interest rates further, Slifer says.

Heartened by aggressive Federal Reserve rate cuts, the strong possibility of a tax cut and consumer spending, Slifer predicts that inventories could continue to be worked through in the second quarter, with the GDP growth rate coming in between 1% and 1.5%. But by the second half of the year, Slifer says the economy will be back on track with a GDP growth rate of 3% in the third quarter and 4% in the fourth.

And if April 4 really was the bottom of the market, as Slifer thinks it may have been, the S&P 500 should return 30% over the next 12 months. ...