Goldman Sachs just issued a very bullish projection for Q3 GDP

It appears the recovery may be going better than expected, and Goldman Sachs isn’t afraid to put a bullish estimate out there: 35% GDP growth for the 3rd quarter.

That estimate is far above consensus at around 21% growth for Q3, per Bloomberg—But economists at the firm write the new bold call is born out of a “much stronger-than-expected jobs report (and solid summer data more generally),” economists at Goldman Sachs wrote in a report Thursday.

Indeed, the firm, like many on Wall Street, says it’s happily surprised by some of the recent data, notably the latest unemployment report for August, which came in at 8.4%—down from 10.2% in July with 1.4 million jobs added, and handily beating Goldman’s own estimate of 9.8%.

To be sure, the rebound in most economic data of late is perhaps surprising given the resurgence in coronavirus cases throughout the U.S. in June and July—and the expiration of the $600 enhanced unemployment benefits, stimulus checks, and the Paycheck Protection Program, designed to buoy small businesses during the crisis, had many worried the data may start looking worse again.

While some economists have been concerned consumer spending has been tapering off, economists at Goldman argue that, on the contrary, “spending instead rose strongly in July, and … high-frequency measures indicate a further 1-2% increase in real spending in August.” That’s prompted the firm to “pencil in” a 1.25% increase in consumption for August (concealing, however, a “decline among unemployment benefit recipients,” the firm notes). But even for those who received enhanced unemployment checks, Goldman notes the “spending decline is more moderate than we had previously expected. The end-of-summer spending pace for unemployment benefit recipients and for lower-income zip codes more generally is also well above Q2 levels—and we expect it to rebound by late September as retroactive top-up checks arrive.” Indeed, economists at the firm note “most information on August spending indicates stable or higher consumption”—apart from clothing, which may be impacted due to slower back-to-school sales.

Those consumer numbers have been key for economists to gauge the pace and success of the recovery thus far. Indeed, “It’s the consumer spending data I’m most uncertain about, and that happens to be 70% of the economy,” Brett Ryan, senior U.S. economist at Deutsche Bank, told Fortune recently.

Apart from the consumer, Goldman is also optimistic there has been a V-shaped recovery in manufacturing and inventories, as economists note “industrial production has risen 10% since April (not annualized),” while nominal business inventories rose in July for the first time since December.

But GDP is clawing its way back from some pretty grisly numbers earlier this year. GDP for the second quarter fell -32.9%, slightly better than some of the more gruesome projections. Now, Goldman’s estimate is more bullish than the Atlanta Federal Reserve’s GDPNow estimate at 30.8 as of Sept. 10.

Still, the economy is by no means out of the woods yet. Congress has stalled on compromising on another stimulus bill to help boost states, the unemployed, and small businesses, and a less expensive proposal by Republicans failed to pass a vote in the Senate on Thursday. Despite the improving data, for some economists, “It would be a grievous mistake to conclude this economy is off and running and they don’t need to provide additional support,” Moody’s Analytics’ Mark Zandi remarked to Fortune in late August.  

But all told, economists at Goldman note the markets have been expecting a far worse case scenario than we’re likely to get—and they believe “the sequential strength in the data in Q3 also bodes well for Q4 and beyond.”

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