New, shutdown-delayed data shows the U.S. economy accelerated sharply over the summer. The Commerce Department’s initial estimate put Q3 real GDP growth at 4.3%, with consumer spending rising 3.5%, according to the Q3 GDP release recap. That’s a faster clip than most forecasters expected, and it helps explain why markets keep flirting with new highs even as many households say the economy feels rough.
The “why” behind the disconnect is affordability and uneven gains. CNN notes inflation has cooled but remains sticky for essentials, with items like ground beef up 15% year over year and electricity up 7%, even as gasoline recently fell to about $2.86 per gallon, per its affordability analysis. Paychecks are not keeping pace for everyone. Bank of America deposit data cited by CNN shows middle-income wage growth around 2.3% and lower-income around 1.4% in November. Meanwhile, confidence is sliding. Reuters reported consumer confidence deteriorated in December, reinforcing that strong backward-looking GDP doesn’t necessarily translate into forward-looking comfort, per the data roundup.
The labor market is the other tension point. CNN highlighted unemployment at 4.6%, a four-year high, and growing worries about job security as openings cool and hiring slows, per job-security concerns. Business Insider adds color on how that slowdown feels on the ground. Job openings have cooled 37% from 2022 highs, while the quits rate fell to 1.8% in October, signaling workers feel stuck, per its job-market chart pack. That’s a sharp turn from the Great Resignation era’s confidence.
Likely next steps hinge on whether Q4 data confirms a softening labor market alongside still-solid demand. Keep your lens on real-time signals like claims, hiring intentions, and category-level inflation. For planning, treat the economy as strong but uneven. It’s a setup where spending can hold up even as sentiment stays sour, which complicates both Fed timing and corporate guidance.
