Domestic strength of the United State offset by foreign weakness. The forecast for real private consumption growth is increased to 3.5%, from 3.0%, estimates Barclays. Despite the weaker-than-expected retail sales data in September, other data, including recovery-level highs in auto sales, point to another quarter of robust consumer spending.
Despite lower expected headline growth, the expectation for domestic demand has improved over the course of the quarter and is nearly unchanged from its Q2 rate of growth.
"We look for final sales to domestic purchasers, calculated as GDP less net exports and the change in private inventories, to have risen 3.6% q/q saar (Q2: 3.7%). With an unchanged outlook for 2.5% growth in Q4, our downward revision to the current quarter reduces growth forecast for calendar year 2015 to 2.4%, from 2.6%. The U.S. economy is likely to post 1.5% in Q3. Ahead of next Thursday's release of the advance estimate of GDP, the forecast for Q3 GDP growth is revised down to 1.5%, from 2.5%, on weaker trade and less inventory accumulation", added Barclays.
