GDP Estimates Do Not Indicate Overheated Economy

Earlier this week, the third revision to second-quarter GDP came in at 1.4%, up from the prior estimate of 1.1%. At least that is headed into the right direction. The Atlanta Fed forecast for third-quarter was reduced from 2.9% to 2.8%, which is certainly good but hardly off the charts. The NY Fed forecast for third-quarter GDP is substantially less, currently at 2.3%. And their estimate for the fourth-quarter is a mere 1.2%.  That is especially disappointing as replenishing depleted inventories was supposed to be driving substantially better growth for the second half of this year. These are hardly the number of a overheating economy that needs to be reined in with an interest rate hike and, if these forecasts hold true, it will be interesting to see how the Fed will respond.