Why The U.S. May Be Contracting In Q3

We are currently seeing a discernable slowdown in the third quarter, suggesting that GDP growth be contracting (versus the 2.5% penciled in by economists)... Consider the following Q3 momentum numbers:

• Real personal income excluding government transfer: flat to slightly negative
• Real personal spending: up at 1.3% at an annual rate, a slowdown from the already tepid 2.0% in Q2
• Housing starts: -32.0% at an annual rate
• Real non-residential construction: flat
• Non-defense shipments excluding aircraft: -1.2% at an annual rate, Q2 was +17.5%

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