The U.S. economy is on track to grow 0.7 percent in the third quarter as a rise in retail spending in July was not enough to overcome an expected drop in inventories, the Atlanta Federal Reserve's GDPNow forecast model showed on Thursday.
This was weaker than the regional Fed bank's prior estimate on Aug. 6 of a 0.9 percent rise in gross domestic product, which was revised lower from an earlier forecast of a 1.0 percent increase, the Atlanta Fed said on its website.
The model forecast the expected decline in inventory investment would shave 2.2 percentage points from third-quarter GDP, more severe than an earlier estimate of a 1.8-point drag.
The 0.6 percent pickup in retail sales in July boosted the expected pace of consumer spending in the quarter to 3.1 percent from 2.8 percent.
Goldman Sachs economists also trimmed their third-quarter GDP growth view, to 2.2 percent from 2.3 percent.
J.P. Morgan economists said on Thursday they held their third-quarter growth forecast at 2.5 percent.
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