Economy

Goldman raises its third-quarter GDP growth estimate to 1.9%

Goldman raises its third-quarter GDP growth estimate to 1.9%

Written by Stephen Kolb

NEW YORK (Reuters) – Goldman Sachs (NYSE) boosted its estimate for third-quarter gross domestic product (GDP) growth by a full percentage point to 1.9 percent from 0.9 percent on Wednesday, after a slew of economic indicators beat expectations.

The broker noted in a note the “above potential” increase in private sector hiring in September, which was reflected in the ADP salary processor’s national employment index, and a narrowing of the trade deficit in August, which was “stronger than our previous forecast,” a panel led by Jan Hatzius wrote, Chief Economist at Goldman.

The ADP report showed that private sector employment grew by 208,000 last month, a 12.4% acceleration from August’s upwardly revised number, while the Commerce Department’s report on international trade showed the August import/export gap narrowed to its lowest reading since May 2021.

Economic calm is the goal of the Fed’s series of sharp interest rate increases, which have been used to tackle high inflation for decades.

But market participants are concerned that the Fed’s measures to cool demand could push the economy into deflation.

A separate note released by the company on Tuesday said it expects a 35% chance of the US economy entering a recession in the next 12 months.

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