Economic output in the US is on track to rebound sharply in the third quarter, according to several estimates. Some analysts are looking for growth in excess of 3% when the Bureau of Economic Analysis publishes the “advance” Q3 report on Oct. 28. Even the cautious forecasts are generally anticipating a solid bounce of 2%-plus, which represents a healthy improvement over Q2’s sluggish 1.2% increase (seasonally adjusted annual rate).
The Wall Street Journal’s mid-August survey has an average Q3 GDP estimate of 2.7%, based on 61 predictions. Only two analysts are looking for growth below 2.0%.
Federal Reserve Vice Chairman Stanley Fisher earlier this week said that the economy is approaching the central bank’s targets for inflation and job growth. “I expect GDP growth to pick up in coming quarters, as investment recovers from a surprisingly weak patch and the drag from past dollar appreciation diminishes,” he said in prepared remarks in a speech at the Aspen Institute.
Many analysts are inclined to agree at the moment, including BlackRock Global Bond Strategist Marilyn Watson. Earlier today she told Bloomberg TV that “the US economy remains on a very robust path.”
Most Q3 GDP projections fall in line with that rosy outlook. The Capital Spectator’s average GDP forecast (based on several econometric estimates), for instance, is calling for a 2.8% increase, which is more than double Q2’s pace (blue bar in chart below).
If the rate of growth picks up in Q3, the improvement will mark the first run of accelerating output across two consecutive quarters since 2009. A minor milestone, but one that represents a significant turnaround from this year’s first quarter, when fears were widespread that a new recession was near.
Meantime, the crowd is wondering if Vice Chairman Fisher’s upbeat outlook will be matched by comments on Friday from Fed Chair Janet Yellen, who’s scheduled to speak at the central bank’s symposium in Jackson Hole, Wyoming.
“It would be quite an event if Fischer went out so close to Yellen’s speech this week and said something” that conflicts with the Fed Chair’s comments, advised Roberto Perli, a former Fed board economist who’s now at Cornerstone Macro. “While I don’t expect Yellen to provide much rate guidance in Jackson Hole, I think she will echo Fischer’s upbeat assessment of the US economy.”