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GDP Data Should Be Strong. How Strong Is the Question.
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The kitchen sink was thrown at the economy in 2025—punishing tariffs, higher inflation, rising unemployment—but the U.S. might still be growing at an above-average speed in a sign of surprising pluck. The delayed initial estimate of the inflation-adjusted gain in gross domestic product for the third quarter will be released this morning. Meanwhile, in cities and small towns across China, two seemingly contradictory facts are simultaneously true: China is closing the gap with the U.S. for global technological dominance, and yet big parts of its economy are a mess.
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GDP Data Should Be Strong. How Strong Is the Question.
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Photo: Victor J. Blue/Bloomberg
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The U.S. economy grew at a healthy clip in the third quarter despite very weak labor conditions in the third quarter, according to projections from economists.
The consensus call among economists surveyed by FactSet is that real GDP grew at an annualized rate of 3% from July to September, driven by solid consumer spending and a boost from trade. The range of calls is wide. As of Dec. 16, the Atlanta Fed’s GDPNow model estimated real GDP growth of 3.5% in the third quarter, down slightly from the 3.6% growth estimate on Dec 11. On the other end, the New York Fed’s NowCast model estimates growth of just 2.3%.
The forecast is a bit softer than the 3.8% rebound in GDP growth seen in the second quarter. Still, it’s expected to be better than the 0.6% decline logged in the first quarter due to a surge of imports that businesses implemented ahead of higher tariffs. (Barron's)
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Chicago Fed's National Activity Index Picked Up in September
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The U.S. economy likely expanded at a faster pace in September, according to a delayed indicator published Monday by the Federal Reserve Bank of Chicago. The Chicago Fed National Activity Index increased to minus 0.21 in August, from a downwardly revised minus 0.31 in August. Being below zero, it still registers the national economy expanding below its historical average trend rate. The activity reading comes ahead of official data on the U.S. economy in the third quarter of 2025, due to be published Tuesday, which is expected to show a modest slowdown in quarterly growth. Like that print, the Chicago Fed's index was delayed owing to the federal government shutdown. The next CFNAI release is due Jan. 26. (Dow Jones Newswires)
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Mortgage Rates Are Falling but Owners Still Won’t Sell
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Nearly 30 million households, or 54% of primary mortgage-holders, have mortgage rates at or below 4%. They were able to buy homes or refinance their mortgages when rates fell to 3% or lower in 2020 and 2021.
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The AI Boom Is Making Real-Estate Investors Rich—and Exposing Them to Risk
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Commercial real-estate investors are becoming more aligned with the AI boom—enabling them to rake in profits on the upside, but also making their funds more vulnerable to a correction in AI that disrupts demand for data centers.
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Key Developments Around the World
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China Sprint for Tech Dominance Can’t Hide an Economy Full of Holes
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The emergence of AI startup DeepSeek earlier this year showed China can challenge the U.S. in some of the world’s most competitive technologies. But Beijing’s gains are coming at a steep cost, with the state’s heavy-handedness in directing investments wasting colossal amounts of money.
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Canada’s Consumer Heads Into 2026 on Firmer Footing
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Canada’s consumer is exiting 2025 in better shape compared with earlier in the year after shrugging off concerns of a trade war and other macroeconomic concerns that had weighed on spending.
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U.S. Targeting Oil Tankers in Bid to Stymie Global Black Market
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The U.S.’s pursuit of oil tankers around Venezuela is part of a new legal strategy under the Trump administration to seize ships that transport black market oil around the world, according to Justice Department officials.
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Gold Rockets to Record High on U.S. Rate-Cut Hopes, Haven Demand
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Gold prices reached a record high on Monday, surging past the $4,400-an-ounce mark on growing expectations of further U.S. interest-rate cuts next year and heightened geopolitical risks spurring safe-haven demand. Futures in New York climbed 1.3% to $4,445.70 an ounce in early European trading after reaching $4,453 earlier in the session, while spot gold rose 1.3% to $4,388.77 an ounce. The precious metal has risen around 68% this year and is on track for its biggest gain since the inflationary shock of 1979.
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8:30 a.m.: Advance estimate GDP
8:30 a.m.: Advance Report on Durable Goods
10 a.m.: Consumer Confidence Index
10 a.m.: Richmond Fed Business Activity Survey
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7 a.m.: MBA Weekly Mortgage Applications Survey
8:30 a.m.: Unemployment Insurance Weekly Claims Report - Initial Claims
1 p.m.: U.S. financial markets close early on Christmas Eve
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U.S. Consumer Optimism a Good Sign for Retail Stocks
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U.S. consumers are feeling good overall and sentiment is improving month over month, UBS analysts say in a research note, citing new December survey data. "This is causing us to turn more bullish on softline stocks than we were last month," they write. "We envision a satisfactory holiday season finish and good 2026 start." Currently, consumers are less worried about big macro issues, and their balance sheets and sense of financial security are improving, the analysts say. They note that these trends are occurring across all income demographics. — Connor Hart
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SNB Could Take Action if Swiss Franc Strength Persists
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The Swiss National Bank could be forced to take action if the Swiss franc strength persists and oil prices fall further in 2026, MUFG Bank analysts say in a note. "If the franc remains strong, pressure will mount on the SNB to reintroduce negative rates and/or intervene to weaken the currency." That would make the franc more attractive as a funding currency if financial-market volatility remains low and global growth picks up, they say. Concerns about Federal Reserve independence risks could favor further franc gains against the dollar, they say. However, any progress toward a Ukraine peace deal could soften franc demand versus the euro. — Renae Dyer
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WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ’s global team of reporters and editors. This newsletter was compiled by markets reporter Vicky Ge Huang in New York. Send your tips, suggestions and feedback to vicky.huang@wsj.com.
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