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Illustration: Trent Joaquin/Axios

We’re just over halfway through Q3, and a handful of Wall Street’s most prominent economists are already hacking their forecasts for economic growth during the period.

Why it matters: The U.S. has been hit with another wave of COVID cases with the spread of the Delta variant. Rising vaccination rates have helped bolster the economy, but there's some early evidence that suggests growth may be cooling.

What they’re saying: This week, Goldman Sachs economists slashed their forecast for Q3 GDP growth to +5.5% from +9.0%.

  • “The impact of the Delta variant on growth and inflation is proving to be somewhat larger than we expected,” Goldman Sachs chief U.S. economist David Mericle wrote.
  • “Spending on dining, travel, and some other services is likely to decline in August, though we expect the drop to be modest and brief," he added. "Production is still suffering from supply chain disruptions, especially in the auto industry, and this is likely to mean less inventory rebuild in Q3.”

Last week, Wells Fargo economists reduced their Q3 GDP forecast to +6.8% from +8.8%.

  • “Rising cases have reignited some caution surrounding the outlook,” Wells Fargo economists wrote.

Bank of America economists have maintained their official Q3 GDP growth forecast of +7.0%. But following the disappointing July retail sales report, they warned that GDP growth appeared to be tracking at closer to 4.5% growth for Q3.

Yes, but: Not everyone is cutting due to the spread of the Delta variant.

  • “We don't expect the latest COVID wave to have a major growth impact,” TD chief U.S. macro strategist Jim O’Sullivan wrote this week. “We expect real GDP to slow from a still-very-strong 7% [rate for Q3].”

The big picture: Even though some forecasts are coming down, they continue to reflect an above-average rate of growth. During the previous expansion, GDP growth averaged 2.3% from 2009 to 2019.

Go deeper

China's economic growth slows

A worker assembles heavy truck engines in Hangzhou in eastern China's Zhejiang Province, on Monday. Photo: Long We/Costfoto/Barcroft Media via Getty Images

China's economy grew 4.9% in the third quarter of 2021 compared with a year earlier, the country's National Bureau of Statistics announced Monday.

Why it matters: The gross domestic product growth in the July-September period in the world’s second-largest economy marked the "weakest pace since the third quarter of 2020 and slowing from 7.9% in the second quarter," Reuters notes.

Gaming CEO calls on industry to help fight climate change

"Catalyst Black." Screenshot: Super Evil Megacorp

Gaming CEO Kristian Segerstrale is calling on leaders in his industry to take action on climate change, after completing a $1.4 million fundraising campaign this summer.

Why it matters: Gaming's pandemic-fueled boom creates an opportunity, and maybe even an obligation, to do some good.

3 hours ago - World

U.S. releases updated vaccination, testing rules for foreign travelers

Photo: Patrick T. Fallon/AFP via Getty Images

Foreign travelers will be allowed entry to the U.S. beginning Nov. 8 if they can provide proof of full COVID-19 vaccination with a shot authorized by the World Health Organization and a negative test within three days of departure, the White House announced Monday.

Why it matters: The updated guidance, which exempts children under the age of 18 from the vaccine requirement, is intended to provide further clarity for airlines and foreign nationals who have been restricted from traveling to the U.S. since early 2020.

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