US economic indicators Report Interpretation

Overview

This is a US macroeconomic indicator update from Goldman Sachs. It combines proprietary activity, financial-conditions, surprise, investment, labor, manufacturing, wage, inflation and sentiment trackers; the reported headline readings point to positive activity but tighter financial conditions and weaker economic surprises.

Core views

Goldman Sachs reports that its nominal GS US Financial Conditions Index tightened by 11.1 basis points over the prior week to 98.49, mostly because the 10-year Treasury yield rose. Its real financial-conditions index also tightened, by 10.3 basis points to 98.21. The update presents these readings as a current measure of the macro-financial backdrop rather than an explicit market recommendation. The firm's Q3 US GDP forecast remains +2.5% on a quarter-over-quarter annualized basis. Its August Current Activity Indicator stands at +3.5%, unchanged from July. Goldman Sachs describes this activity indicator as the first principal component of 37 key weekly and monthly US economic indicators, so it is intended to summarize a broad set of high-frequency macro signals rather than rely on one release. At the same time, Goldman Sachs says its US MAP index of economic surprises declined on net to +0.49. The report also updates proprietary trackers covering capital expenditure, labor-market slack and job growth, manufacturing and non-manufacturing surveys, wages, core inflation, and social-media economic sentiment. The available text does not provide their individual readings, but their inclusion shows that the update assesses growth and inflation conditions through a broad indicator set.

Analysis framework

Goldman Sachs updates a set of proprietary and external-data trackers. It first measures the financial backdrop through nominal and real financial-conditions indices, then cross-checks the growth outlook with its GDP forecast, a broad current-activity composite, and an economic-surprise measure, alongside trackers for investment, labor, surveys, wages, inflation and sentiment.

Methodology notes

• Other

  GS US Financial Conditions Index

  A proprietary index used to summarize changes in the financial environment; this update reports nominal and real index movements and attributes most of the weekly nominal tightening to a higher 10-year Treasury yield.

• Other

  Current Activity Indicator principal-component composite

  The report defines the indicator as the first principal component of 37 key weekly and monthly US indicators, using a statistical composite to summarize broad current economic activity.

Key data

• Nominal GS US Financial Conditions Index98.49Tightened by 11.1bp over the last week, mostly due to a higher 10-year Treasury yield.
• Real GS US Financial Conditions Index98.21Tightened by 10.3bp over the last week.
• Q3 US GDP forecast+2.5%Quarter-over-quarter annualized forecast.
• US MAP economic-surprise index+0.49Declined on net.
• August Current Activity Indicator+3.5%Unchanged from July's +3.5%.

Impact & implications

The update's headline indicators combine an unchanged positive activity reading and a 2.5% annualized Q3 growth forecast with a tighter financial backdrop and a net decline in economic surprises. Goldman Sachs does not state an asset-specific implication or recommendation.