The US economy is expected to lose steam in the fourth quarter compared to the third quarter, but growth forecasts have improved recently, according to improved high-frequency indicators.
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The average estimate from a collection of short-term data compiled by CapitalSpectator.com points to a 2.0% expansion in the fourth quarter. This pace is below the 4.9% jump recorded in the third quarter. However, today’s revised average for the fourth quarter is up from earlier estimates.
The median instant estimate released on November 8 was a more modest estimate of 1.0%. The latest update is encouraging, but the critical question remains: Will subsequent indicator updates for the fourth quarter confirm stronger forecasts?
If it does, the news will bolster confidence that the fourth-quarter slowdown will be milder than recently expected and that today’s update is more signal than noise.
Using today’s revised estimate as a yardstick, the chances of a recession beginning in the near term seem less likely.
Goldman Sachs (NYSE:GS), for example, said yesterday (Nov. 15) that “the likelihood of a U.S. recession is much lower than generally believed — reiterating its long-term outlook of just 15% over the next 12 months. .”
Nancy Vanden Houten, chief US economist at Oxford Economics, agrees.
“What we’re hoping for right now is a soft landing,” he says. “We expect the economy to cool significantly, but seem to be avoiding a direct contraction in GDP”.
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