Robust spending by U.S. consumers drove greater-than-expected economic expansion in the third quarter, and the strongest growth rate in two years. The report offered fresh evidence that consumers continue to lift the U.S. economy, even as inflation remains higher than the Federal Reserve’s 2% target, hiring remains sluggish and consumer-confidence readings reflect a dour overall mood. Meanwhile, President Trump is down to four finalists for Fed chair, and the consensus on Wall Street is that White House adviser Kevin Hassett will get the job. The next Fed chair will only get the job having precommitted to lowering interest rates: That doesn’t fit most definitions of independence, writes Greg Ip for The Wall Street Journal. 

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The same thing that makes Kevin Hassett the favorite to become the next Federal Reserve chair is what worries his critics—that someone so close to President Trump can’t be an independent central banker.

This Fed transition is unique in that the president wants a Fed chair who doesn’t fit traditional notions of “independent.” He wants someone to support his overall economic agenda, which means lowering interest rates, a lot.

Trump made this clear in a social-media post Tuesday. He lauded the strong third-quarter growth report, then lamented that markets often sell off on good news in anticipation of the Fed raising interest rates to avoid inflation.

The U.S. economy continues to power through the trade and immigration shocks of 2025, defying widespread expectations of a slowdown or even a recession and blowing past other developed countries.

One big reason: Americans continue to spend, despite their pessimistic outlook on the economy, their lingering anger about high prices and even a slowdown in the job market. Enormous business investment in the data centers and other scaffolding needed for the artificial intelligence race also helps explain the economy’s growth.

• Canada GDP Edges Up After Sharp Contraction in October

Manufacturing activity in the mid-Atlantic region contracted again, but at a less sharp clip this month, as conditions broadly improved and expectations for future business picked up pace. The Fifth District Survey of Manufacturing Activity's composite manufacturing index rose eight points to minus 7 in December, the Richmond Fed said Tuesday. Economists polled by The Wall Street Journal had expected a weaker minus 10. (Dow Jones Newswires)

Japan was a global bright spot in 2025. Despite much hand-wringing over its debt burden, it is likely to remain so in 2026, writes Aaron Back of The Wall Street Journal.

The county is firmly in a reflation phase with growth, wages and prices all in an upcycle. The Bank of Japan has responded by raising interest rates to their highest level in three decades, prompting some concern among commentators and investors. But this should be seen as a strong vote of confidence in the Japanese economy, which has proven resilient to tariffs and global shocks.

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

New supply of U.S. high-yield debt rose 20% in 2025 to $334 billion as companies returned to the public debt market following low supply in recent years, CreditSights analysts say in a note. Lower-rated companies issued bonds for refinancing purposes and balance sheet management purposes. "Increase in issuance volumes in 2025 was less a function of renewed risk-taking and more a reflection of improved functionality in the high-yield primary market," the analysts say. — Miriam Mukuru

The minutes of the Reserve Bank of Australia's December meeting showed that the central bank continues to strike a hawkish tone, as policymakers keep a close watch on inflation, says NAB's group chief economist Sally Auld. The minutes "reflect anxiety about the recent trend in inflation," she says in commentary, adding that RBA "believed the economy to be operating with a degree of excess demand, but was uncertain as to whether financial conditions were restrictive enough to bring aggregate demand and supply into balance." The minutes showed that the RBA discussed the potential need for a rate hike next year—noting markets moved from pricing in a further 25-basis-point cut in the official cash rate by end-2026 to pricing in a 25-basis-point increase. — Ronnie Harui

• Concerned that artificial intelligence could threaten Communist Party rule, Beijing is taking extraordinary steps to keep it under control.
• The Korean won and the Japanese yen strengthened amid Asian policymakers’ warnings against excessive currency weakness versus the U.S. dollar.
• In the fourth winter of full-scale war, Ukraine is dealing with its most severe energy crisis since 2022.

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.