U.S. GDP growth in Q3 is on pace to come in at around +3.0 percent, suggesting that the economy is extremely strong headed into the end of the year. Unfortunately, Morgan Stanley analyst Ellen Zentner believes that 3.0 percent Q3 growth doesn’t paint an accurate picture of the economy’s most recent turn.

According to Zentner, U.S. economic growth started off strong in the first few weeks of Q3 but has since slowed, indicating a weak Q4 ahead. She believes the Federal Reserve will have a difficult time justifying a possible December interest rate hike. Instead, Zentner suggests the Fed remain patient.

“Historically, the Fed has been criticized for being back-footed on policy,” she wrote. “There’s never been a stronger argument for that stance than now.”

Morgan Stanley’s cycle indicator has stalled in recent weeks. While the firm’s recession indicators are not showing signs of an imminent recession, Zentner said…

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