US: Q2 GDP is likely to be revised higher - BBH

Research Team at BBH, suggests that in the US Q2 GDP is likely to be revised higher to 1.3% at an annualized pace from 1.1%. 

Key Quotes

“The NY Fed's GDP tracker has the economy growing 2.26% here in Q3, while the Atlanta Fed puts it at 2.9%.  It would be the first quarter in four that expands by more than 2%. 

One of the under-appreciated shifts in the Fed's dot plot was to cut its estimate long-term US growth (growth potential) to 1.8% from 2.0%.  Some saw this as a dovish signal, but we demur. It implies that the non-inflationary pace of growth is lower than previously estimated.  It is not the ideal way to close the output gap, but the consequence is the same and justifies the gradual pace of normalization of monetary policy.  Increasing growth potential is not a something that monetary policy can address. It is a challenge for structural reforms and fiscal policy (public investment).”