StockTouch Blog

Goldman “The economy is looking…ehhh”

August 27, 2012 by Peter

Well its time for your weekly does of quasi-bad news about the economy, just enough to hold you over till next week. Recent strategy notes from Goldman Sachs are consistent with what many think is the macro economic trend in the US – it’s stronger than the recessionistas have long thought.   So the best take away if you’re long, is that things aren’t yet contracting.  On the flip side though, is the fact that the economy is still far to weak to drop the unemployment numbers.  And the good/bad news is that this reduces the likelihood of QE this year.  More from Goldman’s Jan Hatzius (via ZH):

“The US economic recovery remains sluggish, but we believe that it will pick up a bit in coming months. Tuesday’s data were generally in line with this expectation:

1.    Stronger retail sales. The July retail sales report showed a clear upside surprise, with a 0.9% gain in sales excluding autos, building materials, and gasoline. The month-to-month strength was broad-based, with sizable gains in most core categories, although it mainly served to reverse some of the declines in the prior month.

2.    Slower inventory accumulation. Inventory accumulation has slowed clearly in recent months, with book-value business inventories up just 0.1% in June, down from a peak of 0.8% in January. We believe that this slowdown has been partly responsible for the disappointing performance in manufacturing surveys such as the ISM and Philly Fed. If it is ending, that should help the manufacturing sector over the next few months.

Our proprietary measures of US economic growth have also picked up a bit further. Our Q3 GDP tracking estimate rose to 2.3% from 2.2%, our current activity indicator (CAI) now stands at 1.2% in July after 1.1% in June, and our US-MAP index of US economic data surprises is moving quickly further toward neutral readings on a 60-day exponential moving average basis.”

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