Our projection for GDP growth in the US this year, at 2.4 per cent, is broadly unchanged relative to April. However, the underlying composition of GDP has shifted toward stronger consumer spending, weaker business investment and weaker trade growth. Stronger consumption stems from the implementation of the fiscal package that was approved by Congress in May. Downward revisions to investment and trade growth reflect the unexpectedly sharp declines recorded in the first quarter of the year. Business investment declined by 1.1 per cent in the first quarter, while the volume of exports of goods and services fell by 0.3 per cent and imports fell by 1.6 per cent. This weak outcome is thought to reflect the high level of uncertainty faced in the run up to the war in Iraq. As this uncertainty has now receded to a large degree, some recovery is anticipated in the second quarter. Monthly indicators suggest that consumer demand remained strong in the second quarter of 2003, although industrial production declined and business orders have continued to disappoint. The volume of exports in the three months to May were 9.2 per cent higher than in the previous three months, while imports rose by 7.4 per cent, pointing to a marked revival of trade in the second quarter. Despite the recovery of trade and positive outlook for consumer spending, the bleaker outlook for investment has caused us to revise our projections for GDP growth in 2004 down by ½ percentage point to 3 per cent. We have also revised down our projections for average GDP growth between 2005-2009 to 2.3 per cent per annum, as higher inflation and planned tax rises will weigh on consumer spending.