Goldman Sachs’ U.S. Economic Research team led by Jan Hatzius provides an instant reaction to today’s disappointing Q3 GDP number:1. Q3 real GDP growth was revised down to 2.0% (quarter-over-quarter, annualized) in the second estimate, down from 2.5% in the advance report. The revision mainly reflected a reduction in the contribution from inventories from -1.1 percentage point (pp) to -1.6pp. Final sales growth-real GDP excluding the effects of inventories-was unchanged at 3.6%.
2. Revisions to the other components broadly offset each other: growth in consumer spending and business fixed investment was revised down slightly (by 0.1pp to 2.3% and 1.4pp to 12.3%, respectively), while import growth was also revised down from 1.9% to 0.5%.
3. Compared to our expectations, however, inventories were higher and growth in final sales was lower. The report was therefore a modest negative for our Q4 GDP expectations. Moreover, real gross domestic income (GDI)-which we have found useful as an additional indicator to assess “underlying” growth in the economy-showed weaker momentum at 0.3% (annualized) in Q3.
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