Goldman Sachs has revised its U.S. GDP growth forecast for the third quarter of 2024 downward, adjusting its estimate from 2.6% to 2.4%.
The revision comes after disappointing industrial production data for July, which saw a more significant decline than anticipated.
Goldman Sachs explains in a note to clients that industrial production fell by 0.6% in July, a sharper decline than the 0.1% they had predicted.
This was partly attributed to disruptions caused by Hurricane Beryl, which the Federal Reserve estimated reduced industrial production growth by 0.3 percentage points.
Goldman Sachs adds that motor vehicle assemblies also saw a notable decrease, dropping by 12.4% to 9.8 million, the lowest level since October 2023. This decline likely reflects retooling activities at factories during July.
Meanwhile, the bank notes that manufacturing production, another key component of the GDP, decreased by 0.3%, in line with expectations.
However, the capex-sensitive business equipment category fell by 0.2%, and utilities production, an important factor in GDP consumption, dropped by 3.7%, further contributing to the downgrade.
Despite a stronger-than-expected retail sales report, the weaknesses in industrial production and auto assemblies prompted Goldman Sachs to lower its GDP tracking estimate.
The firm also slightly reduced its Q3 domestic final sales forecast by 0.1 percentage points to 2.3%.
The adjustment reflects Goldman Sachs' slightly more cautious outlook on the U.S. economy following the data as it continues to monitor the impact on overall economic growth.