Early Q4 GDP Estimate Hints Sharp Economic Slowdown Could Be on the Horizon

investing.com:

Yesterday’s blowout rise for US economic growth in the third quarter delivered an upside surprise, especially for analysts who remain all in with forecasting recession. But perhaps the warnings will finally find traction via the current run of softer Q4 nowcasts.

Before focusing on this year’s outlook for the final quarter, let’s start with Q3’s 4.9% increase in GDP, which is more than double Q2 gain. The rise was an upside surprise for most estimates, including CapitalSpectator.com’s final 3.8% nowcast for Q3.

For the dwindling band of analysts who’ve been warning for much of the year that a recession is near, yesterday’s economic data is a shock that should serve as a wake-up call that it’s time to revise their models (or narrative arcs).

Yet some are simply doubling down and forecasting that recession risk is still high, albeit delayed again. Eventually, the pessimism will be right, much as a broken watch offers the correct time twice a day.

Perhaps the failed recession forecasts will hit pay dirt for Q4. The initial guesstimate is a weak 0.8% increase – a world below Q3’s gain, based on the median estimate for sources compiled by CapitalSpectator.com.

(Note: three of the seven estimates in the chart below don’t currently offer Q4 nowcasts.)

The obvious caveats: it’s still early in the current quarter and so the current median nowcast should be viewed with a high degree of caution.

Yet by some accounts, the possibility that the economy may finally crack suggests that trouble is lurking once again.

Andrew Hunter, deputy chief U.S. economist at Capital Economics said:

“It would be very surprising if consumption growth remains this strong in the fourth quarter,”

“There’s room for higher rates and various other headwinds