Morgan Stanley revises down US GDP forecast

Morgan Stanley has cut its second quarter GDP forecast for the US to 0.3 per cent from 0.4 per cent. The unexpected fall in housing starts and permits in June was probably temporary, said economist Ted Wieseman, but enough to warrant cutting the outlook.

After a 9.4 percent pullback from the February cycle high, single-family starts are now running far below the pace of new home sales. Unless sales roll over — which was certainly not the message from the surging homebuilders’ survey — supply of unsold new homes will fall to record lows in coming months, likely spurring a sharp renewed pickup in new home construction.

Goldman, Deutsche, JP Morgan and Barclays have all cut their forecasts for US GDP in recent weeks.