Economic Sentiment Belies Strong Economic Estimates
Authored by Lance Roberts via RealInvestmentAdvice.com,
Economic growth metrics for the United States have recently shown surprising resilience; however, consumers’ economic sentiment has not.
According to the Bureau of Economic Analysis’s advance estimate, real Gross Domestic Product expanded at an annualized rate of just 1.4%, well below expectations and a steep drop from the 4.4% pace in the third quarter. However, the record-long federal government shutdown, which ran from October 1 through November 12, subtracted roughly 1 full percentage point from growth, as federal outlays plunged 16.6%.
Stripping out that self-inflicted drag, underlying growth was closer to 2.4%, a pace more consistent with a healthy expansion. Consumer expenditures rose 2.4%, moderating from the third quarter’s 3.5% but still solid, while business investment climbed a healthy 3.8%, powered by the ongoing AI-driven capital spending boom. With the government now reopened, the shutdown’s drag is expected to reverse in early 2026, providing a tailwind to first-quarter growth.
Notably, Gross Domestic Product (GDP) measures the total output of goods and services in the U.S. Of that total, personal consumption expenditures (PCE) comprise roughly 68%. In other words, so goes the ...
Continue Reading »