Market Outlook: The Bureau of Economic Analysis (BEA) released the 3rd quarter GDP and Personal Consumption Numbers this morning, and they were barn burners.

Q3 U.S. GDP increased 4.3%, at an annual rate, in Q3 2025, hugely surpassing the +3.2% consensus and accelerating from 3.8% in Q2, according to data released by the Bureau of Economic Analysis Tuesday morning. By this time we would have gotten the second estimate but this one will count as the initial estimate of Q3 economic growth, because of the government shutdown.

What were the key reasons? The resilient customer. The faster growth in Q3 GDP reflected an acceleration in consumer spending, higher exports and government spending - certainly no surprise. Imports, which are subtracted from GDP, decreased less in Q3, the BEA said. Clearly, there are some tariff related lags still within the trade numbers, but mercifully getting smaller. Personal consumption expenditures climbed 3.5%, YoY leapfrogging 2.5% Q2 growth and handily beating the +2.7% consensus. A special mention to corporate profits, which rose a whopping 4.4% against the small 0.2% increase in the prior quarter.

According to the Wall Street Journal, this was the fastest growth since the third quarter of 2023.

Rising consumer spending was partly driven by healthcare, including outpatient services, and at hospitals and nursing homes. International travel, legal services and spending on products like personal computers and software also contributed. Artificial intelligence-related spending helped, too, though the pace of growth appeared to cool from the second quarter. Overall business investment growth slowed to 2.8% in the third quarter from 7.3% in the prior three months. A measure that tracks demand from businesses and consumers—but not more volatile government, inventory and international trade data—ticked up slightly in the third quarter. That suggests underlying demand from businesses and consumers remained solid.

Growth is good but comes with inflation: Inflation continued to stay above the Federal Reserve's 2% target, with the PCE price index rising 2.8% in Q3, vs. 2.1% in Q2. The Core PCE price index, excluding food and energy, also vaulted 2.9% vs. +2.6% in the prior quarter.

Even as the market see-sawed initially, it closed stronger with the S&P 500 up 0.5% to 6,909.75, a hair below its 52 week and all time high of 6,920, which, given the Santa Claus rally mode that we seem to be in is a foregone conclusion. Forget about an interest rate cut though.