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The third-quarter GDP report, scheduled for launch on Oct. 30, will nearly actually be delayed because of the ongoing authorities shutdown. In the meantime, the most recent nowcasts nonetheless level to a average tempo of financial exercise, primarily based on the median estimate for a set of nowcasts compiled by CapitalSpectator.com. However with every day that key authorities financial experiences are postponed, the reliability of Q3 GDP nowcasting turns into extra unsure.
The obtainable numbers point out an estimated 2.3% development price for Q3. The median nowcast marks a pointy slowdown from the three.8% reported for Q2.
One of many inputs, nonetheless, displays a powerful 3.9% improve. If the Atlanta Fed’s GDPNow estimate (as of Oct. 17) is appropriate, Q3 development will tick up barely from Q2’s torrid tempo.
The Federal Reserve, nonetheless, seems to be setting financial coverage on the view that the labor market is slowing and decrease rates of interest are wanted. Fed funds futures proceed to cost in excessive odds that the central financial institution will cut back its goal price once more on the Oct. 29 coverage assembly.
The ten-year Treasury yield can be pricing in dovish coverage expectations. The benchmark price fell for a 3rd day on Wednesday, dropping to three.95%, near the bottom stage of the 12 months.
Goldman Sachs economists on Monday recognized 5 key drivers behind the sharp decline in job creation, notes Reuters: waning immigration flows, cutbacks in authorities hiring and spending, rising adoption of synthetic intelligence, mounting tariff-related bills and commerce instability, and broader macroeconomic headwinds.
It’s affordable to imagine that the downshift within the labor market will take a toll on GDP development. However till the federal government reopens and begins publishing new knowledge, questions on how financial situations are evolving stays a guessing recreation.
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