US: GDP growth to show a moderation - Wells Fargo

Next Friday, US GDP data for the third quarter will be released. Analysts at Wells Fargo, expected a reading of 3.3% (q/q, annualized), a slowdown from the 4.2% registered during the second quarter. 

Key Quotes: 

“After rising at a robust 4.2% annualized rate in Q2, we look for Q3 GDP growth to clock in at a more moderate 3.3% annualized rate, as some components supporting the breakneck Q2 pace should pullback in Q3. We look for some payback in international trade after net exports contributed 1.2 percentage points to growth in Q2, partially due to record shipments for items such as soybeans as exporters attempted to get ahead of retaliatory tariffs.”

“We expect consumer spending to register a 3.4% annualized pace in Q3, but income growth that is only slowly picking up and tightening financial conditions could weigh on spending growth in coming quarters.”

“Although trade should prove a drag, we look for inventories to contribute nearly 2 percentage points to topline growth after a large drawdown in Q2. Government spending should also pick up as the state and local sector continues to expand, and we see business investment maintaining a solid pace of growth in Q3.”