On October 29, BEA will report its Q3 GDP results of the U.S. It is widely speculated that Q3 GDP should grow at 2.0% rate. But the direct reading from the CMI weighted index points to a contraction of 2.0%. Using the equation I introduced as shown here and considering the drop of the inventory reduction of Q3 in 2009 to 0.5% from about 2.0% in Q2 of 2009, I expect the Q3 expansion should be -1.5% plus inventory adjustment in Q3.
Today’s durable goods report, which indicates the September durable goods orders dropped 0.8% excluding transportation, enhances my belief that the Q3 GDP starts contracting.