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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

NW Arkansas focuses on affordable housing

Illustration: Trent Joaquin/Axios

The good news is most of NWA's economic indicators are pointing in the right direction. The bad news is it's hard to afford a house here.

  • The best news is there's a plan for a strategy to address it.

Companies are still loading up on equipment

The willingness of businesses to invest in themselves shows no sign of slowing.

Driving the news: Core capital goods orders rose 0.8% in September, beating economist expectations for growth of around 0.4%, government data out yesterday show.

5 mins ago - World

U.S. announces diplomatic boycott of Beijing Winter Olympics

An Olympic-themed sculpture in Beijing on Dec. 1. Photo: Hou Yu/China News Service via Getty Images

The United States announced Monday that it will not send officials to the 2022 Beijing Winter Olympics in protest of human rights abuses committed by the Chinese Communist Party.

Why it matters: The diplomatic boycott — which won't prevent American athletes from competing — marks a major escalation between the U.S. and China amid already heightened tensions over the CCP's treatment of Muslim minorities, military threats to Taiwan and economic tariffs.

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