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And The GDP Downgrades Begin: Goldman Slashes Q3/Q4 GDP

Remember the data-dependent recovery, which until the NFP report two weeks ago, could seemingly do no wrong. Well, according to Goldman the recovery party just ended.

From Goldman's Kris Dawsey:

BOTTOM LINE: Business inventories rose less than expected in August. In light of the disappointing September retail sales report and slower-than-expected inventory growth in August, we reduced our Q3 GDP tracking estimate by three-tenths to +3.2%. We also moved our Q4 GDP forecast down a quarter point to +3.0%.

 

MAIN POINTS:

 

1. Business inventories rose 0.2% in August (vs. consensus +0.4%). Retail inventories—the only component of the report not already known for the month—declined 0.3%. Auto and auto parts inventories declined 0.7%, while ex-autos inventories were flat.

 

2. In light of the disappointing September retail sales report and slower-than-expected inventory growth in August, we reduced our Q3 GDP tracking estimate by three-tenths to +3.2%. We also moved our Q4 GDP forecast down a quarter point to +3.0%, due to weaker momentum in consumer spending heading into the quarter.

So is this just the "bad news is good news" that the algos were looking for?