Economic Growth ‘Priced In’ Is Overdone: Goldman Says Short Cyclicals, Buy Defensives

Despite the rise in growth expectations (Atlanta Fed’s GDPNOW now at +5.8% for Q3 GDP), Goldman’s Louis Miller and desk believe the recent pullback in cyclicals will continue over the next few weeks…

Economic growth is the key driver of cyclical outperformance but Goldman’s economists forecast that growth will decelerate from an estimated 2.4% in 2Q to 2.2% in 3Q and 1.1% in 4Q 2023 (QoQ annualized).