Yesterday we got GDP data for Q3. The headline reading of 2.8% growth was better than expected. However, most of the “beat” was due to the accumulation of inventories, rather than robust demand, so excitement was actually muted.
So what’s the deal with Q4?
Goldman Sachs economists Sven Jari Stehn and Kris Dawsey have put together a “roadmap” for Q4, talking about the various forces and pressures currently at play in the economy.
Here’s what they see going on:
- Consumer spending should accelerate modestly, translating into better retail and vehicle sales. Confidence measures indicate a snapback after the October confidence collapse.
- Homebuilding data will remain mixed.
- Industrial expansion will continue. The strong ISM numbers continue to be bullish on this front.
- The labour market data will be volatile.
- Core inflation will pick up slightly. There’s already been some firming on these measures and that will likely continue.
Currently Goldman is seeing 1.4% GDP growth for the quarter.