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Atlanta Fed GDPNow gauge takes a tumble to 0.7%

Manufacturing down for the Empire State

The drumbeat of disappointment is continuing for the U.S. economy, with the latest numbers showing the third quarter looking a lot like the first quarter.

While economists continue to search for signs that domestic growth is finally loosening the shackles of the financial crisis, the data suggest otherwise. An initial reading Monday for the third-quarter manufacturing outlook was bleak, and the spending outlook both for consumers and businesses does not suggest rapid improvement anytime soon.

Hence, the result: The Atlanta Federal Reserve's GDPNow tracking tool, which has been a pretty reliable rule of thumb lately, indicates third-quarter advancement of just 0.7 percent, with the momentum to the downside. The indicator has dropped 0.3 percentage point just in the past week as the model adjusts for a likely decline in inventory build for the three-month period. (The CNBC/Moody's Analytics Survey has GDP growth at a comparatively lofty 2.6 percent.)

That lower reading also reflects conditions before the plunge in the Empire State manufacturing index released Monday morning, which showed that activity in the New York region contracted considerably. Gross domestic product increased 2.3 percent in the second quarter—a number economists are revising up due to a sharp but likely unsustainable inventory build—after rising just 0.6 percent in the first quarter.

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Peter Boockvar, chief market analyst at The Lindsey Group., called the Empire reading "awful" and said it was the worst for the data point since April 2009.

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