Goldman: "When Will Growth Slow, and When Will We Know?"

Goldman Sachs economists put out a note this morning: When Will Growth Slow, and When Will We Know? A few brief excerpts: Most of the sequential inflation increases in the last trade war took place within 2-3 months of the tariffs’ implementation, and we expect spending growth to slow shortly after prices start rising. ... [W]e expect to see continued softness in the survey data before the hard data start to weaken around mid-to-late summer. Our analysis cautions against dismissing the current deterioration in the survey data despite their recent record, and the evolution of the data in recent weeks is consistent with previous “event-driven” growth slowdowns. Still, it is too early to draw strong conclusions from the limited data we have so far, and we will continue to watch for indications of slower growth in the coming months.It will take some time for tariffs and policy uncertainty to show up in the hard data. I think we will start seeing the impact of tariffs on inflation in the May or June reports (released in June and July). We might see the impact earlier on New Home sales. New home sales are reported when the contract is signed, so the report tomorrow will be for contracts signed in March (prior to the April 2nd tariff shock).  But we might see policy and the stock market sell-off impacting April new home sales in the May report.