Goldman Sachs Lifts Q3 US GDP Forecast to 2.7% on Trade, Factory Data

Goldman Sachs has upgraded its forecast for U.S. economic growth, raising its third-quarter GDP tracking estimate to 2.7% from a previous 2.4%. The bank attributed the revision to stronger-than-expected details within recent economic reports on factory orders and the trade balance.

Details of the Revision

The investment bank announced Tuesday that it was increasing its Q3 forecast by 0.3 percentage points on a quarter-over-quarter annualized basis. This adjustment reflects underlying strength in specific components of the economic data that outweighed some weaker headline numbers.

In contrast to the third-quarter upgrade, Goldman Sachs maintained its tracking estimate for second-quarter GDP growth at 1.5%.

A Mixed Economic Picture

The revision comes amid a backdrop of varied economic signals. While the headline figure for factory orders in June showed a 0.3% month-over-month decrease, missing expectations for an increase, Goldman's analysis likely focused on positive revisions to underlying data.

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Key details from the report included:

• Core capital goods orders growth was revised up by 0.3 percentage points to 1.2%.
• Core capital goods shipments growth was revised up by 0.1 percentage points to 2.0%.

Labor Market Shows Signs of Cooling

Separate data from the Job Openings and Labor Turnover Survey (JOLTS) indicated a continued, gradual cooling in the labor market. Job openings fell to 7.359 million in June, a decline of 178,000 from the prior month's downwardly revised figure.

Despite the drop in openings, other labor metrics remained stable. The quits rate, a measure of worker confidence, was unchanged at 2.0%, while the layoff rate held steady at 1.1%. Goldman Sachs noted its estimate for the jobs-workers gap now stands at 0.2 million, which is below its pre-pandemic level.