Strong Q3 GDP reading on tap
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The U.S. economy will likely show the strongest overall growth in a year when third-quarter data is released Thursday, powered by consumer spending and AI investment.
Driving the news: The Commerce Department's initial release of Gross Domestic Product data is scheduled for Thursday at 8:30am ET.
- Analysts surveyed by Bloomberg anticipate that it will show a 3.2% annual rate of growth in the July-through-September quarter; the Federal Reserve Bank of Atlanta's GDPNow tracker pegs it at 3.3%. Either result would be the most rapid GDP growth since the third quarter of 2025.
- September data on personal consumption, income and inflation will be released at the same time. The Personal Consumption Expenditures Price Index, preferred by the Fed, is expected to show a 0.5% rise for the month and tick up to 3.6% over the last 12 months.
State of play: The biggest contributors to the projected strong growth are likely to be consumer spending, especially by affluent households sitting on strong gains in wealth, and business investment, fueled by the AI buildout.
- Goldman Sachs economists, for example, expect a 3.4% annual growth rate in personal consumption expenditures and a whopping 10.2% growth rate in business fixed investment.
Yes, but: Those gaudy investment numbers will be partly offset by a surge in imports, reflecting the role of imported semiconductors in the data center buildout.
- On Wednesday morning, the government released preliminary numbers showing that the trade deficit in goods widened by $2.8 billion, to $134.9 billion in September — the largest gap since March 2025.
- That implies that trade will be a net subtraction from GDP — a 3.25 percentage point drag, per Grace Zwemmer with Oxford Economics.
- "However, the strong September showing from capital goods imports means that a lot of the drag from net exports will be offset by a substantial build in private inventories and a rapid increase in business equipment spending," Zwemmer wrote.
The bottom line: The AI capital spending boom is boosting GDP, but less than its headline numbers imply because it depends on imports.
