Welcome to Thoughts on the Market.

I'm Ellen Zettner, Chief U.S. Economist for Morgan Stanley Research.

Along with my colleagues, bringing you a variety of perspectives, I'll be talking about

3rd quarter GDP growth in the U.S. and the impact on Fed tapering.

It's Wednesday, September 8th at noon in New York.

So last week pulled no punches by delivering some surprisingly weak U.S. economic data.

First, motor vehicle sales in August mis-significantly to the downside, with a fourth consecutive

monthly decline.

And on Friday, August payrolls were reported at a disappointing $235,000 versus our expectation

for $725,000.

And finally, our recent August retail sales tracker forecasted another large decline.

So the bottom line is data in line with our expectation puts 3rd quarter consumption

and contraction at minus 0.6%.

Our third quarter GDP tracking ended last week at just 3.4%, sharply lower compared with

just one week ago.

All of this data likely raises concerns that a growth scare is underway in the U.S.

And at first blush, the sharp mark down to our third quarter growth estimates would seemingly

support that view.

For analysts, strategists, and financial markets, it's the second derivative that matters.

And that is, is the pace of growth, slowing, or quickening.

For economists and monetary policy makers, it's the first derivative, is growth positive

or negative.

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