Announced this morning, the estimate of GDP growth for the third quarter 2025 came in at 4.3% on an annualized basis, much higher than expected. In review of the components, consumer spending was strong while investment was relatively weak. The PCE price index was up 3.8% on a quarterly basis, higher than expected, while the core PCE price index, which excludes food and energy, was up 2.9% on a quarterly basis, as expected.
Overall, the GDP estimate indicates the economy grew strongly in the third quarter and more than the 3.8% annualized increase in the previous period. Consumption was strong, indicating consumers were still actively spending, which helped push the price index increase above expectations. Investment was relatively weak, highlighting the fact that some of the investment deals announced earlier in 2025 have not yet started.
Despite not receiving data releases during the government shutdown, these historical measures indicate the economy was growing sizably leading into the fourth quarter. With the Federal Reserve already adjusting policy to be more accommodative in recent weeks, it remains to be seen if the economy even gets to a recessionary environment in the coming months. Amidst this dynamic, how well consumer spending holds up will be key for the economy and markets in the coming weeks.
In all, the 10-year US Treasury yield ticks higher this morning and equity futures are lower as we head into the market open. We wish everyone a safe and happy holiday season!
This material is intended to be for informational purposes only and is intended for current or prospective clients of Argent Trust Company. This information is obtained from sources believed to be reliable, and its accuracy and completeness are not guaranteed. Information does not constitute a recommendation of any investment strategy, is not intended as investment advice, and does not take into account all the circumstances of each investor. Forward-looking assumptions are Argent Trust Company’s current estimates or expectations of future events or future results based on proprietary research and should not be construed as an estimate or promise of results that a portfolio may achieve. Actual results could differ materially from the results indicated by this information. Investments can go down as well as up. Past performance is not a reliable indicator of future results.
