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Goldman Cuts Its Q2 GDP Estimate Again To 1.1%, Just Above "Stall Speed"

Tyler Durden's picture


Just as we speculated less than an hour ago, here comes Goldman with its take of retail sales and its impact on GDP: "Retail sales decline more than expected in June. We revised down our Q2 GDP tracking estimate by two tenths to +1.1%. The Empire manufacturing survey rebounded somewhat in July although the details were mixed."

Full note:

Weak Retail Sales; Mixed Empire Index; Q2 GDP Tracking 1.1%


BOTTOM LINE: Retail sales decline more than expected in June. We revised down our Q2 GDP tracking estimate by two tenths to +1.1%. The Empire manufacturing survey rebounded somewhat in July although the details were mixed.




1. Retail sales declined by 0.5% (month-over-month) in June, while the consensus had looked for a 0.2% gain. Key details of the report were also weaker: non-auto retail sales declined by 0.4%, and growth in April was revised down. Similarly, “core”/control retail sales (ex-autos, gasoline and building materials) was weak, declining 0.1% in June. The weakness reflected lower sales across a variety of categories, including general merchandise stores, electronics, furniture, sporting goods stores, and health and personal care retailers. Merely food and beverages, clothing, and non-store retailers posted gains on the month. The report was a negative for our tracking estimate of Q2 GDP growth, which we reduced by two tenths to 1.1%.


2. The New York Fed’s monthly Empire manufacturing survey rebounded somewhat to 7.4 in July, from a 2012 low of 2.3 in June. However, the details were mixed. The new orders index fell to -2.7 from +2.2, and the unfilled orders index to -13.6 from -5.2. Better news came from the shipments and number of employees components (+10.3 and +18.5 respectively). Input and output price pressures look benign.


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Mon, 07/16/2012 - 09:23 | Link to Comment orangedrinkandchips
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Mon, 07/16/2012 - 09:29 | Link to Comment Mr Lennon Hendrix
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He doesn't need to right now.  All the other Central Banks of the world have taken over for him and are running their printing presses like Xerox is going out of business.

Mon, 07/16/2012 - 09:50 | Link to Comment SilverTree
SilverTree's picture

I got ~$300 face Junk silver on Friday.

Mon, 07/16/2012 - 09:23 | Link to Comment brewing
brewing's picture

time to buy equities...

Mon, 07/16/2012 - 09:24 | Link to Comment SWRichmond
SWRichmond's picture

What "growth"?  We are deficit-spending 10% of GDP, and we get 1.1% "growth"?  So we're printing and borrowing 10%.  Who is kidding whom here?  The economy is fricking collapsing.

Mon, 07/16/2012 - 09:30 | Link to Comment Mr Lennon Hendrix
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It's fiine!  The economy is fiine!

Mon, 07/16/2012 - 09:37 | Link to Comment neidermeyer
neidermeyer's picture

You're just not pulling your weight ,,, Gov't is doing their share at 20%+ of the GDP calculation and the fine gentelmen at GS , WFC and BAC are doing their bit at 50% of the calculation and will no doubt redouble their efforts to make up for the JPM shortfall... You only have 30% of the wagon to pull ... put your back into it.

Mon, 07/16/2012 - 09:43 | Link to Comment Paper CRUSHer
Paper CRUSHer's picture

Right but since i'm feelin miserable a few hedonic adjustments are called for,like spin the no's around a littl'

GDP grows 1/10 from 1% to 1.1% indicating expansion

...........nah,still feelin terrible......shit dammit......HEY TYLER UNDER YA TRADING DESK THAT BOTTOM DRAWER......YEAH,PASS ME THAT COPY OF JAMES K.GLASSMAN'S DOW TO 36000 WILL YA.

.....ahhh......never fails to bring a smile to ones face.

Mon, 07/16/2012 - 09:25 | Link to Comment youngman
youngman's picture

Down is up...up is down..and Barton Biggs died.....I wonder how volume will be today....

Mon, 07/16/2012 - 09:32 | Link to Comment neidermeyer
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But Ronnie Biggs is still kicking ... we need to grab ours like he grabbed his...

Mon, 07/16/2012 - 09:27 | Link to Comment monopoly
monopoly's picture

I just do not see more QE until markets really tank. Down 200, up 200. Dow still above 12,000. August at the earliest but maybe Sept. Either way will make little difference. Although then the political firestorm hits the Fed. I wonder if the head inmate wishes he were back at Stanford.

Mon, 07/16/2012 - 09:28 | Link to Comment zero19451945
zero19451945's picture

The US is simply not growing at all and probably hasn't had genuine non-debt fueled growth for decades.

Backing out the deficit spending and statistical machinations leaves GDP is solid negative territory.

The US needs to embrace a clearing of bad debt, an end to the manipulation of all capital markets, and an immediately cessation of deficit-spend-till-the-currency-collapses.

No country has ever gotten away with deficit spending forever.

Mon, 07/16/2012 - 09:29 | Link to Comment Commander Cody
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Considering the prescience, is Tyler Goldman or vice versa?

Mon, 07/16/2012 - 09:33 | Link to Comment lizzy36
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The only function of economic forecasting is to make astrology look respectable.

Mon, 07/16/2012 - 09:50 | Link to Comment Arnold Ziffel
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Retail sales drop for third month in a row


It was the third straight month that retail sales have fallen and the first time that has happened since 2008.


and as in ZH earlier this morning (which i just noticed...sorry)

Mon, 07/16/2012 - 09:49 | Link to Comment Saro
Saro's picture

Easy solution:

1. The Fed prints a quadrillion dollars and gives it to congress.

2. Congress buys a paper clip from Ben Bernanke for 1 quadrillion dollars.

3. Ben Bernanke surrenders the quadrilion dollars back to the Fed.

GDP to the moon!! Everything is saved!!

Mon, 07/16/2012 - 09:57 | Link to Comment caimen garou
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good one, saro for fed president, now i got to go get a clean shirt after coffee disaster!

Mon, 07/16/2012 - 10:03 | Link to Comment gookempucky
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Again nothing but ILLUSION and magical America the Beautiful.

jacta alea est

the die is cast

Mon, 07/16/2012 - 10:06 | Link to Comment john_connor
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Always trying to make an argument for more "medicine."  Unfortunately the medicine has always been poison and everyone will soon realize this.

Mon, 07/16/2012 - 10:10 | Link to Comment Forward History
Forward History's picture

You obviously didn't get the memo. This time it will be different. This time, we'll make it work. We can do it. Why? Because we're America, so obviously we can't fall victim to printing our way into a collapse. All it takes to advocate a debt-based economy is a complete disregard for history -- done deliberately, perhaps.

See also: Paul Krugman.

Mon, 07/16/2012 - 10:23 | Link to Comment FieldingMellish
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Mon, 07/16/2012 - 10:27 | Link to Comment Stuck on Zero
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Now correct that 1.1% for real inflation?  Me thinks it's -5%.


Mon, 07/16/2012 - 11:16 | Link to Comment Meesohaawnee
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never worry. Ben will just get on the bat phone and order  a SP1370 print. No problems here kiddos move along . These arent the droids your lookin for .

Mon, 07/16/2012 - 14:54 | Link to Comment mind_imminst
mind_imminst's picture

Remember that the PDs are loading up on treasuries right now. It is in their best interest to see the market tank (or forecast such) - dump the treasuries unto the "marks" - and then go long equities/risk assets (at the short term bottom) - right before the FED announces the next open/transparent QE. Hedge accordingly.

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