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Goldman, other economists shave Q2 GDP expectations

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Economists shaved growth expectations for the second quarter after the June durable goods report revealed weak shipments and raised a red flag on high hopes for business spending in the second half.

Goldman Sachs economists trimmed second-quarter growth to 3.0 percent from 3.1 percent, but JPMorgan and Barclays economists are looking for even less—2.6 percent and 2.8 percent, respectively. Core capital goods shipments, which affect GDP calculations, fell 1 percent in June, and May was revised to a negative 0.1 percent from a 0.4 percent rise.

A CNBC/Moody's Analytics rapid update shows that economists cut their GDP forecasts by 0.1 percent, and that the composition of growth is less favorable with more inventory build and less final demand.

Durable goods orders—measuring shipments of everything from dishwashers to aircraft—actually rose slightly more than expected at 0.7 percent, after May's decline of 1 percent. Core capital goods orders rose 1.4 percent month over month, and durable goods, ex-transport were up 0.8 percent.

But May's core—nondefense capital goods orders ex-aircraft—was revised down from a 0.7 percent gain to a negative 1.2 percent.

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The advanced reading on Q2 GDP is expected Wednesday, and while looking back, it could carry more weight than usual after the first quarters' shock 2.9 percent decline. If JPMorgan and Barclays estimates for sub-3 percent growth is correct, the economy would have actually contracted in the first half.