GOLDMAN: 3 Key Points Regarding Today's Disappointing GDP Number

jan hatziusGoldman’s Jan Hatzius

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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