The United States economy It continues to surprise on the upside and holds up better than expected. And after grow 4.3% In the third quarter, it enters 2026 showing signs of solidity and strength. What reading will the Federal Reserve (Fed)? «These numbers will put some pressure on Treasuries, but I don’t think this will change anything for the Fed.«, indicates Andy Brenner, head of international fixed income at NatAlliance Securities, who hopes that the organization keep rates unchanged during the first months of the new year. «A better-than-expected third quarter sows even more doubts about the trajectory of interest rates next year,» says Danni Hewson, head of financial analysis at AJ Bell. Thus, although the report has been released with a delay due to the Government closure (its initial publication was scheduled for October 30), the GDP shows that The Fed has no need to cut rates with ‘urgency’ to support the economy. What’s more, investors are discounting with a probability of 86.7%, according to CME’s FedWatch tool, that the US central bank is going to make a pause in their next meeting in January. In fact, the Fed has repeatedly reiterated its dependence on data to make its monetary policy decisions in a scenario of sticky inflation and labor market weakness. «The strong increase in GDP in the third quarter was helped by a increased defense spending and one large contribution of net trade as imports decreased, but the underlying measures are consistent with a solid expansion,» says Michael Pearce, chief US economist at Oxford Economics. An analysis shared with experts at ING Economics, for whom the «impressive annualized rate of 4.3%», has been mainly due to «the strong net trade performancewith an increase of 8.8% in exports and a drop of 4.7% in imports.» However, regardless of how this report may impact the Fed’s movements, the president donald trump He has welcomed the good progress of the country’s economy. A success that he attributes to his tariff policy. «Third quarter GDP was 4.3%, far exceeding expectations of 3.2%. 60 of 61 Bloomberg economists were wrong, but ‘TRUMP’ and other geniuses were right. SUCCESS is due to Good Government and TARIFFS. Consumer spending is STRONG, net exports are up sharply, imports and trade deficits are down sharply, and there is no inflation! Thanks to my tax bill (the big bill!) and tariffs, investment is breaking records. Trump’s economic golden age is full steam ahead: ‘They ain’t seen nothing yet!’. Thank you for your time. «Let’s make America great again!» the president posted on his social network. But Trump has gone further by making it clear that «I want my new Fed chair to lower interest rates if the market does wellnot that he destroys it for no reason. I want to have a market like we haven’t had in decades, a market that goes up with good news and down with bad news, as it should be and as it was.» «A nation can never be economically GREAT if intellectuals are allowed to do everything possible to destroy the upward trend. Let’s encourage the good market to improve, instead of making it impossible. We will see much more natural and much better figures than ever. Let’s MAKE AMERICA GREAT AGAIN! America should be rewarded for its SUCCESS, not torn down for it. Anyone who disagrees with me will never be president of the Federal Reserve!«. In this regard, Bret Kenwell, eToro market analyst in the US, points out that «for the second consecutive quarter, US GDP far exceeded economists’ expectations, reaffirming the resilience of the consumer and the economy. While concerns about the labor market, tariffs and inflation continue to rise, The economy continues to defy its skeptics with slow progress«. «First quarter GDP experienced a volatility shock in anticipation of President Trump’s broad tariffs, while second quarter GDP experienced significant fluctuations following the implementation of the tariffs. We are now beginning to see that the situation is stabilizing and, as has happened for several years, The American consumer continues to lead the economy. After two quarters of negative figures, public spending also contributed positively to GDP,» he adds.
SLOWER GROWTH IN THE FOURTH QUARTER?
However, heading into the fourth quarter, strategists anticipate that GDP is likely to show slower growth. «The result has been fantastic, but Fourth-quarter GDP likely to see considerably slower growthdue in part to the effects of the month-long government shutdown. We also do not believe that the net trade component will continue to contribute as significantly, while consumer spending will also slow,» they write in ING Economics. «Expectations of a cooling of the data probably explain the relatively muted market reaction, with the 10-year Treasury bond yield rising only 3 basis points on the day and the cut expectations of the federal funds rate for 2026 still above the 50 basis points«, they emphasize from the firm. For its part, Kenwell highlights that «the data has been scarcer than usual due to the government shutdown, but if consumers remain resilient during the holidays and the fourth quarter, this should bode well for US GDP and corporate profits. Earnings have continued to surprise to the upside and have contributed significantly to this year’s rally. Bulls expect this trend to continue in 2026 as investors look for further upside«.
IMPACT OF AI
The other point of attention for the market is the impact of artificial intelligence (AI) on US growth. «Investment in AI-related sectors is essential for GDP growth, and the United States would be close to recession this year if it were not for technology spending, as other spending has stagnated after Covid-19,» they explain at Deutsche Bank. Similarly, ING Economics claims that for four consecutive quarters, business capital spending outside the technology sector has contracted, representing performance typical of a recession. «However, investment in computing and software has increased by 18% year-on-year, which means that Overall business capital spending continues to rise«In addition, the firm emphasizes the current importance of capital spending on technology, since investment in computing and software contributes to a third of year-on-year GDP growth (2.3%). «It is unlikely that this situation will change significantly in the short term, given that Both the government and the business sector are aligned in their fight for America’s victory in the battle for AI dominance«Precisely Brian Moynihan, CEO of Bank of America (BofA), believes that «the investment in AI has been growing during the year and will probably be a larger contributor next year and beyond«None of these trends (spending by high-income households and investment in technological capital) appear to be weakening and, in all likelihood, will continue to drive growth in 2026«, they conclude in ING Economics.
