Veteran fund manager Bill Miller of Legg Mason Capital Management believes the US stock market could rise by 20% this year, thanks to economic forecasts that substantially underestimate the potential for growth.

Miller said yesterday that the fall in US industrial output has "far exceeded" the actual drop in demand, the shortfall having been made up from inventories. As a result, he forecast a rapid restocking by US companies, that would stimulate a sharp rise in economic growth over several quarters, and therefore a rise in the stock markets.