Update (1035ET): As we warned, the drop in wholesale inventories has sparked concern on US economic growth in Q3. Goldman has slashed its forecast:
While the advance trade report had positive implications for net exports in September and Q4, the inventory data was weaker than our previous assumptions. We lowered our Q3 GDP tracking estimate by two tenths to +1.4%, ahead of Wednesday's advance release.
And The Atlanta Fed has just cut its forecast too:
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2019 is 1.7 percent on October 28, down from 1.8 percent on October 24.
Indeed, since President Trump’s election we’ve only seen one quarter of growth at a rate below 2%, and analysts will be looking out for what this might mean for the economy heading into next year’s election
* * *
Thanks to a plunge in inventory stacking for non-durable goods (which sounds admittedly oxymoronic), wholesale inventories slumped 0.7% MoM in September - the biggest decline since Nov 2017.
This reversal mimics the hangover after 2013/2014's inventory-stacking surge...
Not exactly a good sign for Q3 GDP revisions (or Q4...)