US Q3 GDP tracking 1.2% after September CPI

The elements of the CPI that we use to deflate core retail sales in our tracking of real PCE growth were above expectations in September. Stronger-than-expected PCE control group prices indicate that more of the softness seen in yesterday's September retail sales report was due to a lower quantity of purchases than what was initially thought. The data modestly trimmed the tracking estimate of Q3 real consumption growth to 3.3% (prior: 3.4%), but left the Q3 GDP tracking estimate unchanged at 1.2% after rounding.

"We continue to expect that strong consumption growth above 3% will be the primary contributor to healthy domestic final sales in Q3", says Barclays.