Strong growth, low credibility

The Bureau of Economic Analysis (BEA) released yesterday the initial estimate for third-quarter 2025 GDP . This report was delayed due to a 43-day federal government shutdown in October–November 2025, which disrupted data collection. It combines elements typically found in the advance and second estimates, replacing those releases. A revision is scheduled for January 22nd, 2026. The number was very good, with a 4.3% annualized growth rate, almost 1% above consensus. In fact, like the last inflation report, too good to be true. Since the first quarter showed a contraction of 0.6%, the overall growth rate, pending the 4Q data point, is 2.5%. How did we get such a good number? Consumer spending was very strong, growing at 3.5%, but if you look at the chart below, it was healthcare spending the one actually leading, which is probably not the category that would benefit the American people the most. In fact, we could argue the opposite: it probably means the U.S. provides very expensive healthcare services. Exports grew 8.8% and imports decline 4.7%, as part of Trump trade policies. All in all, a much stronger data than expected, that doesn’t feel it reflects Main Street situation, since consumer confidence is down to one of the lowest readings. The odds for a rate cut in January went down further, from 30% to 15%, with equity markets up slightly and bond yields up as well. That indicates the market didn’t buy the good news. We need to wait for the revision in January to see if the number holds.

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