Search ForexCrunch

Economists at Goldman Sachs have raised their third-quarter gross domestic product (GDP) forecast to 35% from 30% on surprisingly strong consumer spending. 

Goldman’s tracking forecast is now 14 percentage points ahead of Wall Street’s consensus forecasts.

Key quotes (source: CNBC)

Following the sharp rise in spending in late spring and early summer, the virus resurgence and the surprise fiscal tightening threatened a reversal. But spending instead rose strongly in July, and four high-frequency measures indicate a further 1-2% increase in real spending in August. 

Looking beyond this quarter, we remain upbeat on growth. Market participants appear to have expected a higher economic price from the virus resurgence and the fiscal fizzle, and the sequential strength in the data in Q3 also bodes well for Q4 and beyond. We also continue to expect a vaccine early next year, and much of the remaining output gap is concentrated in virus-sensitive sectors. 

The US economy contracted by record 31.7% in the second quarter as the coronavirus pandemic took a toll on the economic activity.