Macro Outlook: Where Is Third-Quarter Growth Going to Come From?

Where is third-quarter growth going to come from? That is the question I was asking yesterday morning...

And now I learn that Jan Hatzius of Goldman Sachs has marked his third-quarter growth rate estimate down from 3.25% to 2.5%:

We have cut our estimates for real GDP growth in the second and third quarter of 2011 to 1.5% and 2.5%, respectively, from 2% and 3.25%.

Even excluding any further changes we now expect the unemployment rate to come down only modestly to 8.75% at the end of 2012.

High-frequency information on overall economic activity has continued to fall substantially short of our expectations. Some of this weakness is undoubtedly related to temporary factors, namely supply chain disruptions and (the temporary part of) the oil shock. But the slowdown of recent months goes well beyond this.