WSJ.com is available in the following editions and languages:
Thank you for registering.
We sent an email to:
Please click on the link inside the email to complete your registration
Please register to gain free access to WSJ tools.
An account already exists for the email address entered.
Forgot your username or password?
This service is temporary unavailable due to system maintenance. Please try again later.
The username entered is already associated with another account. Please enter a different username
The email address you have entered is already in use.Please re-enter the email address.
Send me information about more WSJ features
Create a profile for me in the Journal Community
Why Register?
Privacy Policy | Terms & Conditions
As a registered user of The Wall Street Journal Online, you will be able to:
Setup and manage your portfolio
Personalize your own news page
Receive and manage newsletters
Receive and manage newsletters
Keep me logged in. Forgot your password?
The U.S. economy very likely returned to growth in the third quarter (the July through September months) after 12 straight months of pretty steep contraction. Nearly all economists — the bulls, the bears, and everyone in-between — expect gross domestic product grew at about a 2.5% to 4% annualized, inflation-adjusted rate.
But in the waning hours before the government releases its first estimate of third-quarter GDP (due out from the Commerce Department at 8:30am eastern on Thursday), forecasters are backing away from some of their previous optimism.
After boosting their third-quarter forecast from 1% to 3% growth a few months ago, Goldman Sachs economists lowered their estimate to 2.7% on Wednesday, following weak data on September shipments of big-ticket durable goods.
Other firms made similar downward adjustments: Macroeconomic Advisers, a St. Louis-based consultancy, reduced their forecast from 3.5% to 3.3%, while Morgan Stanley economists shaved their estimate from 3.9% to 3.8% growth.
Might they still be too optimistic?
It doesn't seem likely — by the time the government releases its estimate, a month after the quarter ends, economists already have much of the underlying data (such as consumer spending) that the Bureau of Economic Analysis uses in calculating GDP during the period.
But surprises still happen — particularly at turning points in the business cycle. For example, the government's first estimate of GDP in the fourth quarter of last year showed a decline of 3.8% — much shallower than most estimates, though it was later revised to a sharper 5.4% decline.
A return to growth in the third quarter of any magnitude will still be good news for the economy, but if Commerce's report Thursday shows growth of only 1%-2% during the quarter, it will be a huge disappointment to markets and economists.
Just last week, the U.K. government reported a drop in its own third-quarter GDP that took most forecasters — who were expecting a small increase — by surprise. Consider it a warning sign.
StumbleUpon
Digg
Yahoo! Buzz
Fark
del.icio.us
MySpace
Error message
Real Time Economics offers exclusive news, analysis and commentary on the economy, Federal Reserve policy and economics. The Wall Street Journal's Phil Izzo and Sudeep Reddy are the lead writers, with contributions from other Journal reporters and editors. Send news items, comments and questions to realtimeeconomics@wsj.com. Read more Economics coverage.
WSJ.com is available in the following editions and languages:
Thank you for registering.
We sent an email to:
Please click on the link inside the email to complete your registration
Please register to gain free access to WSJ tools.
An account already exists for the email address entered.
Forgot your username or password?
Read Full Article »