Goldman Sachs has slashed its Q2 GDP growth forecast to 1.8%, a reduction of 0.8 percentage points from its prior estimate. The downgrade comes just ahead of the official GDP release and points to a cocktail of factors dragging on the economy: trade dynamics, inventory data, and petroleum reserve drawdowns.
Here’s the thing. A bank that projects full-year 2026 US GDP growth at 2.6%, well above the Bloomberg consensus of 2.0%, is now flagging that one particular quarter looks rougher than expected.
What’s behind the downgrade
Inventories are the second factor. When businesses draw down stockpiles rather than ordering new goods, it mechanically subtracts from GDP.
Then there’s the petroleum reserve drawdown piece. When the government releases oil from strategic reserves, it can create distortions in the GDP calculation that make the headline number look weaker than underlying economic activity actually is.
