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The US economy remains on track to post a moderate downshift in growth in next month’s third-quarter GDP report, based on the median estimate for a set of nowcasts compiled by CapitalSpectator.com.

Output is projected to rise an annualized 2.2% for the July-through-September period via the median nowcast. If correct, growth will slow substantially from the strong 3.3% increase reported for Q2. The Bureau of Economic Analysis is scheduled to publish its initial Q3 GDP data on October 30.
 

Today’s median Q3 nowcast has been revised up from the previous 1.7% estimate, published on Aug. 22.

Recent economic reports align with the slowdown that’s reflected in the current median nowcast. US job openings fell in July, for instance, dropping to a level that’s close to a 4-1/2 year low and fueling expectations that the labor market is cooling.

Tomorrow’s payrolls report for August will be widely read for an update on assessing the economic outlook. Economists are forecasting another weak increase in hiring: the consensus point forecast indicates a 77,000 rise in nonfarm payrolls, according to Econoday.com If correct, the labor market will post its fourth straight month of tepid growth, marking the weakest increase for the rolling four-month window since the pandemic.

Fed funds futures are currently forecasting a near-certainty of a rate cut at the next policy meeting on Sep. 17. Another weak jobs report on Friday will reaffirm the market’s view that the central bank is poised for a dovish pivot.

“I’ve been clear that I think we should be cutting at the next meeting,” Federal Reserve Governor Christopher Waller said in an interview with CNBC on Wednesday. “You want to get ahead of having the labor market go down because usually when the labor market turns bad, it turns bad fast.”

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