The Atlanta Fed’s GDPNow model has sharply lowered its forecast for US GDP growth in the third quarter, cutting it to 4.3% as of August 14, down from 6.2% on August 3. This nearly two-percentage-point drop in less than two weeks was driven primarily by a collapse in household consumption expectations, from 4.1% to 2.5%, and a decline in private investment forecasts, from 17.9% to 15.2%. Since personal consumption expenditures account for roughly two-thirds of US GDP, this deterioration suggests that recently released economic data came in weaker than expected.
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