US GDP was in-line with expectations but the composition wasn’t. The market was looking for consumption to be a driver but it fell short of estimates. Instead it was inventory building and trade that did the heavy lifting.
Trade can (and likely will) be a continued tailwind for US growth but inventory building added 0.4 percentage points to growth and that isn’t sustainable.
Goldman Sachs has lowered its first quarter GDP forecast to 2.7% from 3.0% on inventory rebalancing.
I’m skeptical to draw any conclusions about Q4 because the advance GDP numbers are revised so many times but on the margins, GDP is more bad news than good.
