Goldman Joins JPM In Cutting Q2 GDP To 1% Stall Speed; A "Funny Chart" Becomes Funnier
Last week it was JPM just somewhat contradicting Jamie Dimon's "kid gloves" CNBC infomercial, when it slashed its Q1 GDP forecast from 2% to 1% (and about to be revised to sub-stall speed). Today, following the latest retail sales unadjusted disaster, it is Goldman's turn to slash its Q2 GDP tracking estimate from 1.3% to 1.0%. Stall speed has arrived despite everyone's forecasts for the this time it's different glorious US economic renaissance (so far "deferred" each year since 2010).
Retail sales rose a smaller-than-expected 0.4% in June (vs consensus +0.8%), with a 1.8% increase in auto sales boosting the headline number. Core sales?excluding autos, gasoline, and building materials?rose an anemic 0.1% (vs consensus +0.3%) while core sales growth in May was revised down one tenth to 0.2%. By category, grocery store sales fell 0.2%, while general merchandise stores (including department stores) rose only 0.1%. In contrast, the smaller categories of apparel (+0.7%) and furniture (+2.4%) showed sturdier growth. Outside of core sales, sales of building materials declined 2.2%.
In light of weaker-than-expected retail sales growth, we reduced our Q2 GDP tracking estimate by three tenths to 1.0%.
Which, however, guarantees some sheer comedy value for the future when Goldman is forced to revise the following funny chart (one of three) from a mere hockey stick, to an all out vertical IMF vaulting pole.
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