The government’s initial estimate of third-quarter GDP for the US is on track to decelerate to a 3.3% increase in the release due at the end of this week, based on the median for a set of nowcasts compiled by The Capital Spectator. That’s a solid gain, but the estimate marks a substantially softer pace vs. the strong 4.2% rise reported for Q2.

Today’s updated projection for Q3 appears relatively reliable in the sense that the current median nowcast has been stable in recent weeks. Earlier this month, the median Q3 estimate was 3.2%.

Although the Q3 profile remains upbeat, analysts anticipate that a slowdown in output will continue in Q4 and perhaps into 2019. One clue for the downgraded outlook comes by way of a recent Reuters poll of over 500 economists, which reflects estimates of softer growth for the world economy in the months ahead. Janet Henry, global chief economist at HSBC, explains:

A simple dynamic is playing out in the global economy right now: the U.S. is booming, while most of the rest of the world slows or even stagnates. The stresses caused by this divergence are playing out uncomfortably in many emerging markets. A US Federal Reserve that is raising interest rates to prevent the US economy from overheating is constraining the policy options of countries where financial conditions are tightening and trade tensions intensifying.

For now, at least, the US numbers published to date look healthy. Yesterday’s update of the Chicago Fed National Activity Index for September reflected a modest downshift in output, but the slight decline in the benchmark’s three-month reading to 0.21 still reflects a solid pace. But while Q3 ended on a relatively upbeat note via this reading, the Chicago Fed numbers also provide more support for thinking that the recent reacceleration in US growth has peaked.

Recession risk for the immediate future remains virtually nil, but as discussed in last week’s economic profile (and this week’s issue of the The US Business Cycle Risk Report), projections point to a risk that the slowdown will persist into 2019.

The estimates for next year could be wrong, of course, for the simple reason that a lot can happen between now and the first half of 2019 that surprises us. Accordingly, it’s still prudent to use the upbeat recent data as a guide. As such, it would be surprising if Friday’s Q3 GDP report reveals that growth slowed well below 3%.

The real issue is watching how the projections for Q4 evolve. Perhaps Friday’s GDP release will offer a new clue, which in turn will provide a bit more insight in what’s in store for 2019.