US Q4 GDP tracking down to 2% due to October durable goods and PCE

There was large upside revision to the Q3 equipment investment, and a weak shipments data led to the revisions in the Q4 estimates lower. October Manufacturers' inventories of durable goods fell 0.2% m/m.

The real personal spending was less than expected for the month of October. This suggests less growth in PCE for Q4 overall and thus the GDP tracking for the 4th quarter was down.

There was revised monthly profile in the latest release, which corresponds to previous second estimate of Q3 GDP that show less momentum for Q4 PCE.

"Taken together, our tracking estimate of Q4 real PCE growth fell to 2.5%, lowering our Q4 GDP tracking estimate one-tenth to 2.2%", says Barclays in a research note. 

The durable goods report revised up core capital goods shipments in September while revising lower manufacturers' inventories of durable goods.

"The revisions trimmed our Q3 GDP tracking estimate one-tenth to 2.0%. In October, core capital goods shipments fell more than expected. The data lowered our estimate of equipment investment for Q4. On net and after rounding, our Q4 GDP tracking estimate fell two-tenths to 2.0%", added Barclays.