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U.S. retail sales surged more than expected in November, signaling that the economy finished the fourth quarter on solid footing. But behind the strong headline number, analysts are pointing to a growing concern: a "K-shaped" economy where spending is increasingly driven by wealthy households while lower-income consumers fall behind.

The Commerce Department reported on Wednesday that retail sales climbed 0.6% in November, a significant rebound from the previous month's revised 0.1% decline. This performance, which beat the 0.4% rise forecast by economists, suggests robust momentum. On a year-over-year basis, sales were up 3.3%.

November Sales Beat Expectations Across Key Sectors

The rebound was broad-based, led by a strong recovery in vehicle sales. The data release, which is catching up after a 43-day federal government shutdown, showed notable gains in several categories:

• Motor Vehicles: Receipts at dealerships jumped 1.0%, reversing a decline from October that followed the expiration of electric vehicle tax credits.

• Building & Garden: Sales at building material and garden equipment stores surged 1.3%.

• Recreational Goods: Sporting goods, hobby, and book store sales vaulted 1.9%.

• Clothing & Online: Clothing store sales increased by 0.9%, and online retail grew by 0.4%.

• Food & Drink: Sales at bars and restaurants, the report's only services component, rose 0.6%.

However, not all sectors saw growth. Sales at furniture and home stores slipped, while electronics and appliance store receipts remained unchanged.

The "K-Shaped" Reality: Who Is Actually Spending?

Despite the positive overall figures, economists are highlighting an economic divergence. The spending boom appears to be powered by higher-income households, while lower-wage workers and recent graduates grapple with a sluggish labor market and rising costs for essentials.

This "K-shaped" trend became more pronounced in the last quarter. Food prices, for instance, saw their largest increase in over three years in December, disproportionately affecting lower-income budgets. Analysts attribute some of this price pressure to President Donald Trump's import tariffs.

Michael Pearce, chief U.S. economist at Oxford Economics, noted that upcoming tax policies could widen this gap. "Heading into tax refund season, the new tax law will boost refunds the most for higher-income groups," he explained, adding that the combined effect of tax cuts, spending cuts, and tariffs "will be negative for the real incomes of the lowest-income households."

Policy Debates and Housing Market Pressures

In response to rising living costs, the Trump administration has proposed several measures, including purchasing $200 billion in mortgage bonds and capping credit card interest rates at 10% for one year. However, banks and financial institutions have warned that a rate cap could restrict access to credit for consumers.

Meanwhile, the housing market faces its own affordability challenges. A separate report from the National Association of Realtors showed that sales of previously owned homes jumped 5.1% in December. But as Ben Ayers, senior economist at Nationwide, pointed out, a persistent lack of supply is likely to drive prices higher, counteracting the benefits of lower mortgage rates.

Inflation and Fed Policy Outlook

The economy's resilience is strengthening expectations that the Federal Reserve will hold its benchmark interest rate in the 3.50%-3.75% range at its upcoming meeting. This outlook is supported by inflation data that, while showing price pressures, does not indicate a runaway spike.

A report from the Bureau of Labor Statistics revealed that the Producer Price Index (PPI) rose 0.2% in November, following a 0.1% increase in October. Over the 12 months through November, the PPI was up 3.0%.

The increase was largely driven by a 0.9% rebound in producer goods prices, with energy accounting for over 80% of the rise. Wholesale food prices remained unchanged. Excluding volatile food and energy, core producer prices climbed 0.2%.

Looking Ahead: Labor Market Concerns Cloud Outlook

While the economy grew at a brisk 4.3% annualized pace in the third quarter, largely fueled by consumer spending, potential headwinds are emerging. The Atlanta Federal Reserve is forecasting an even stronger 5.3% growth rate for the fourth quarter, but a weakening labor market could threaten future spending.

Core retail sales—a measure that excludes cars, gasoline, building materials, and food services and aligns closely with the consumer spending component of GDP—rose 0.4% in November. This followed a downwardly revised 0.6% gain in October.

Economists at Wells Fargo noted that "the non-existent hiring environment has many households concerned about steady income prospects, while growing affordability challenges pressure discretionary purchases." As the government works through data backlogs from the shutdown, a clearer picture of inflation and consumer health will emerge, but the underlying split in the U.S. economy remains a central theme for the year ahead.

Just two weeks into the new year, President Donald Trump has initiated a series of disruptive actions, including claiming control over Venezuela, escalating threats to seize Greenland, and deploying masked immigration agents onto American streets. This surge of activity comes as voters prepare for midterm elections that will decide control of Congress.

Even for a presidency known for chaos, the recent turmoil is notable. The administration is also pursuing an unprecedented criminal investigation into the Federal Reserve, a cornerstone of the U.S. economy. Each move carries significant risks, from foreign entanglements to undermining the nation's financial system, yet Trump continues to press forward, unsettling even some Republican allies.

"The presidency has gone rogue," said Yale University historian Joanne B. Freeman, calling the situation something "we haven't seen in this way before."

Trump, however, appears unfazed by the potential consequences. Speaking in Detroit on Tuesday, he expressed confidence in his position. "Right now I'm feeling pretty good," he stated, during a speech intended to highlight the economy. During the event, he also attacked Federal Reserve leader Jerome Powell for not lowering interest rates, saying, "That jerk will be gone soon."

Trump Takes Aim at the Federal Reserve

While Republican leaders have largely stood by Trump, his move against the Federal Reserve has created new fractures. The issue came to a head when Powell disclosed on Sunday that the Fed was facing a criminal investigation regarding his testimony about the central bank's building renovations.

The Justice Department has previously pursued charges against Trump's adversaries, including former FBI Director James Comey and former national security adviser John Bolton. However, targeting Powell, who oversees the nation's monetary policy, appears to be a step too far for some conservatives.

Fox Business host Maria Bartiromo, typically a staunch Trump supporter, offered a rare critique. "It just feels like most on Wall Street do not want to see this kind of fight," she said on her show. "The president has very good points, certainly. But Wall Street doesn't want to see this kind of investigation."

The Federal Reserve's role is to manage the economy by setting interest rates. Trump insists they should be lower, but interfering with the institution's independence could backfire and lead to higher borrowing costs.

Aggressive Moves on the World Stage

Simultaneously, Trump has expanded America's involvement in complex foreign affairs, a move that seems to contradict his "America First" campaign promises.

The most significant action was the U.S. military operation to remove Venezuelan President Nicolás Maduro. While Trump initially cited Maduro's alleged role in the drug trade, he has since framed the intervention as an economic opportunity. He announced that the U.S. would control some of Venezuela's oil sales and that the country would be run from Washington, even posting a meme declaring himself the "acting president of Venezuela."

Trump has also issued threats toward the leadership of Cuba and Iran. In another surprising move, he insisted the U.S. will control Greenland "one way or the other," a stance that strains relations with Denmark, a NATO ally to which Greenland belongs.

"NATO becomes far more formidable and effective with Greenland in the hands of the UNITED STATES," Trump posted on social media Wednesday. "Anything less than that is unacceptable."

Domestic Tensions Rise Over Immigration Raids

At home, the administration's immigration crackdown continues to fuel confrontations. In Minneapolis, a federal agent shot and killed Renee Good, a 37-year-old mother of three. Officials claimed the U.S. Immigration and Customs Enforcement officer acted in self-defense, but local officials have disputed this account based on video evidence.

The incident followed Trump's decision to dispatch 2,000 immigration agents to Minnesota in response to fraud reports within the state's Somali community. On Tuesday, Trump defended the crackdown, stating the administration was targeting "thousands of already convicted murderers, drug dealers and addicts, rapists, violent released and escaped prisoners, dangerous people from foreign mental institutions and insane asylums, and other deadly criminals."

These actions have created "chaos, confusion and uncertainty," said Cleveland Mayor Justin Bibb, who leads the Democratic Mayors Association. "The ICE raids in Minneapolis have really shocked the consciousness of many of my residents... People don't feel like the world is getting better."

Voters to Deliver Verdict in November

With midterm elections approaching, voters will soon weigh in on Trump's leadership. Democratic campaign officials are focusing their messaging on the economy, where public opinion remains negative despite the president's positive assessments.

According to a January poll from The Associated Press-NORC Center for Public Affairs Research, just 37% of U.S. adults approve of Trump's handling of the economy. His economic approval, once a strength, has been low throughout his second term.

"Donald Trump's visit to Michigan puts a glaring, unflattering spotlight on how he and House Republicans have failed to address the affordability crisis," said Rep. Suzan DelBene, who leads the Democrats' House campaign arm.

Some progressive activists, however, are frustrated that the party isn't focusing more on what they see as Trump's unprecedented power grabs. Ezra Levin, co-founder of the protest group Indivisible, warned that Trump's actions could worsen. "Authoritarians don't willingly give up power," Levin said. "When weakened and cornered they lash out."

Despite the criticism, Trump insists he is fulfilling his campaign promises, and his allies in Washington remain united behind him. Kiersten Pels, a spokesperson for the Republican National Committee, predicted that voters will reward the party in November.

"Voters elected President Trump to put American lives first — and that's exactly what he's doing," she said. "President Trump is making our country safer, and the American people will remember it in November."

U.S. consumer spending showed surprising strength in November, with retail sales rising more than economists expected and signaling a robust start to the 2025 holiday shopping season. This resilience presents a new challenge for the Federal Reserve as it weighs its next move on interest rates.

Key highlights from the delayed Census Bureau report include:

• Headline Growth: Retail sales climbed 0.6% in November from the previous month.

• Exceeding Forecasts: The increase surpassed the 0.4% rise anticipated by economists surveyed by The Wall Street Journal and Dow Jones Newswires.

• Broad-Based Gains: Growth was driven by stronger sales of vehicles, building materials, and sporting goods.

The report, released Wednesday, was postponed due to the government shutdown in the fall. The data is a critical barometer for the economy, as consumer spending accounts for the majority of U.S. economic growth and directly impacts corporate earnings and job creation.

Holiday Shopping Kicks Off with a Bang

November's retail sales totaled $735.9 billion, a significant rebound from October's more sluggish performance. The strong figures suggest that American consumers are still willing to spend, providing a positive signal for retailers during their most critical sales period.

"Coming in slightly ahead of expectations, November retail sales point to ongoing consumer resilience," noted Brett Kenwell, a U.S. investment analyst at eToro. "November's results give some hope that consumer spending remained upbeat into year-end."

The data revealed healthy activity across several key sectors. Sales improved for sporting goods, building materials, and automobiles. Additionally, spending at restaurants and bars—a key discretionary category that reflects consumer confidence—also saw a healthy increase. Miscellaneous store retailers, which include sellers of used merchandise, recorded a notable rise in sales as well.

Analyzing the Undercurrents of Consumer Strength

Economists at Wells Fargo pointed to a 0.4% increase in the "control group" of retail sales. This metric offers a clearer view of underlying consumer demand by excluding volatile categories like cars, gasoline, and building materials.

Based on this data, the economists stated that holiday season sales "are tracking toward the top end" of their projected 3.5% to 4% year-over-year growth range.

"The upshot is a still-resilient consumer coming into the homestretch with plenty of momentum," wrote Wells Fargo economists Tim Quinlan and Shannon Grein.

Spending Holds Firm Despite Labor Market Questions

The solid retail performance in November is particularly noteworthy given the growing concerns about a weakening labor market. Consumer spending, which constitutes over two-thirds of the U.S. economy, has continued to power forward.

Kathy Bostjancic, Chief Economist at Nationwide, offered an explanation for this trend. "Despite lackluster employment growth and diminished dynamism in the labor market, the unemployment rate remains low," she wrote. "Continued wealth gains from higher equity prices fuels spending by upper middle-income and upper income households."

Implications for the Federal Reserve's Rate Decision

This unexpectedly strong sales data adds a layer of complexity for Federal Reserve officials, who are scheduled to meet later this month to decide on interest rates. While recent reports have indicated that inflation is cooling, the robust consumer activity could make it harder for the central bank to justify another rate cut.

The Fed's policy committee has already cut interest rates at its last three meetings, though officials have been divided on the necessity of further easing. This division persists even as President Donald Trump has advocated for more aggressive rate reductions.

According to the CME FedWatch tool, which uses fed funds futures trading to estimate rate probabilities, market participants see only a 5% chance that the Fed will lower its benchmark rate at its next meeting on January 28.

Scott Anderson, Chief U.S. Economist at BMO, suggested the retail numbers reinforce the case for holding rates steady. "Today's retail sales numbers bolster the narrative of economic resilience," he wrote, "and will help cement market expectations for a pause in Fed rate cuts at the upcoming January FOMC meeting."

Asian liquefied natural gas (LNG) prices have fallen roughly 30% year-on-year, hitting their lowest point since April 2024 despite peak winter heating season. Spot prices for LNG in Asia are now in the mid-$9 range per million British thermal units, a level not seen between late December and early January since 2020.

This downturn is a story of two opposing forces: a global supply glut clashing with weakening demand across Asia.

Global LNG Exports Hit All-Time High

A primary driver behind the price drop is a surge in supply. According to shipping data from Kpler, global LNG exports climbed 4% in 2025 to a record high of approximately 429 million metric tons.

Figure 1: Global LNG exports reached new highs in 2025, propelled by a significant increase in U.S. production and steady output from other major players like Qatar and Australia.

The United States led this expansion, with its exports jumping 25% to 109 million tons—the first time the country has surpassed the 100-million-ton mark. This growth was fueled by new production from the Plaquemines export facility in Louisiana. Qatar also contributed to the supply increase, with its exports rising 2% to 81 million tons following equipment upgrades.

The trend is expected to continue. Both the U.S. and Qatar have major projects scheduled to begin production, and global exports are forecast to rise 9% in January compared to December, setting a new monthly record of 44 million tons.

Demand Falters Across Asia

While supply is booming, demand in Asia—the world's largest LNG market—is shrinking. In the last year, Asian nations imported 275 million tons of LNG, a 4% decline.

China's market showed a particularly sharp contraction. The country's LNG imports fell by 15% to 66.5 million tons, the second-largest percentage decline on record after the price spike in 2022.

Yutaka Shirakawa, a gas analyst at the International Energy Agency, noted that "multiple factors were at work, such as increased natural gas production in China and higher imports through pipelines."

China Pivots to Discounted Russian LNG

Geopolitical tensions have also reshaped trade flows. China has significantly reduced its LNG purchases from the U.S., turning instead to the Middle East and Russia for supply.

Russia's Arctic LNG 2 facility made its first shipment to China in August, and the Portovaya facility on the Baltic Sea followed in December. Although the U.S. under President Joe Biden sanctioned both facilities, President Donald Trump has not yet penalized China for the imports, effectively allowing them to continue.

This shift comes with a significant financial incentive. "China is believed to be buying sanctioned Russian LNG much more cheaply—40% below market prices, for example," said Daisuke Harada, director general of the energy business unit at the Japan Organization for Metals and Energy Security.

Kpler estimates that if Arctic LNG 2 continues its exports to China, the facility's total exports could hit 5.7 million tons in 2026, four times its 2025 total. This influx of inexpensive Russian LNG is expected to loosen the market further, applying more downward pressure on prices.

Ripple Effects in Japan's Electricity Market

In Japan, where LNG is a critical fuel for power generation, the falling prices are already impacting the electricity market.

Electricity futures traded by power companies have dropped about 10% since late November, settling around 11 yen (7 cents) per kilowatt-hour in the Tokyo market. This decline reflects both the restart of nuclear power plants and the anticipated effect of lower fuel costs.

However, the benefit to consumers is not immediate. Most Japanese electric and gas companies import LNG on long-term contracts linked to crude oil prices. But if low spot prices persist, it could eventually lead to rate cuts for customers, depending on their provider and plan.

Still, the trend introduces a new risk. Electricity consultant Hiroyasu Mizukami warned that if market power prices continue to fall, they could drop below the actual cost of imported fuel. "Profit margins for major electricity and gas companies could fall," he said.

President Donald Trump has escalated his push for the United States to acquire Greenland, framing the move as a matter of national security and urging NATO to support the acquisition of the world's largest island from Denmark. The heightened pressure came as top officials from the U.S., Denmark, and Greenland convened in Washington for high-stakes discussions on the territory's future.

White House Meetings Amid Rising Tensions

On Wednesday, U.S. Vice President JD Vance and Secretary of State Marco Rubio met for approximately one hour with Danish Foreign Minister Lars Løkke Rasmussen and Greenlandic Foreign Minister Vivian Motzfeldt. The meeting was organized to address the future of Greenland, a semiautonomous territory of Denmark and a key NATO ally.

Figure 1: U.S. Vice President JD Vance (center) and Secretary of State Marco Rubio (right) with Danish and Greenlandic officials in Washington for high-stakes talks on the island's future.

However, just hours before the talks began, President Trump took to social media to intensify his demands. He declared that the U.S. "needs Greenland for the purpose of National Security" and insisted that "NATO should be leading the way for us to get it."

Trump warned that if the U.S. did not take control, Russia or China would, stating, "AND THAT IS NOT GOING TO HAPPEN!" He concluded that NATO becomes "far more formidable and effective with Greenland in the hands of the UNITED STATES," calling anything less "unacceptable."

Denmark and Allies Bolster Arctic Military Presence

In response to the escalating situation, Denmark announced it would increase its military activities in the Arctic and North Atlantic. Danish Defense Minister Troels Lund Poulsen confirmed the plan was being developed "in close cooperation with our allies" to address an unpredictable security environment.

"This means that from today and in the coming time there will be an increased military presence in and around Greenland of aircraft, ships and soldiers, including from other NATO allies," Poulsen said. While he did not specify which allies were involved, Swedish Prime Minister Ulf Kristersson later confirmed on X that officers from the Swedish Armed Forces were arriving in Greenland as part of an allied group to prepare for the Danish exercise "Operation Arctic Endurance."

Greenland Pushes Back: "Why Don't You Ask Us?"

Greenland's representatives to the U.S. and Canada responded to Trump's social media posts by asking, "Why don't you ask us?" and highlighting that a very low percentage of residents support becoming part of the United States.

Greenland's Prime Minister, Jens-Frederik Nielsen, made his position clear: "If we have to choose between the United States and Denmark here and now, we choose Denmark. We choose NATO. We choose the Kingdom of Denmark. We choose the EU."

When asked about Nielsen's comments, Trump was dismissive. "I disagree with him. I don't know who he is. I don't know anything about him. But, that's going to be a big problem for him," the President replied.

Local residents echoed their government's sentiment. Tuuta Mikaelsen, a 22-year-old student in Nuuk, told The Associated Press she hoped American officials would "back off," explaining that Greenlanders benefit from Denmark's provisions of free healthcare and education.

Strategic Value vs. Local Reality

The U.S. interest in Greenland is tied to its strategic location and resources. As climate change melts Arctic ice, new, shorter trade routes to Asia could open up. The island also holds untapped deposits of critical minerals essential for electronics like computers and phones.

President Trump specifically mentioned that Greenland is "vital" for the "Golden Dome" missile defense program and has cited threats from Russian and Chinese ships as justification for U.S. control.

However, some residents dismiss these claims. "The only Chinese I see is when I go to the fast food market," said heating engineer Lars Vintner, who added that he has never seen Russian or Chinese ships while sailing or hunting. His friend, Hans Nørgaard, agreed, calling Trump's statements about foreign ships "just fantasy."

Vintner suggested security is merely a "cover," arguing that Trump's true motive is to profit from the island's natural resources. Denmark has already affirmed that the U.S. can expand its military footprint on the island under a 1951 treaty that grants it broad rights to establish bases with Danish and Greenlandic consent.

International Reactions and Diplomatic Fallout

The dispute has drawn attention from other international allies. French Foreign Minister Jean-Noël Barrot announced that France intends to open a consulate in Greenland on February 6. Speaking to RTL radio, Barrot criticized the U.S. position, stating, "Attacking another NATO member would make no sense; it would even be contrary to the interests of the United States... So this blackmail must obviously stop."

Meanwhile, a bipartisan delegation of U.S. lawmakers is scheduled to travel to Copenhagen to meet with Danish and Greenlandic officials, indicating that diplomatic channels remain active as the crisis unfolds.

As 2025 draws to a close, prediction markets are betting on a strong finish for the U.S. economy. A growing consensus on platforms that track real-time economic data suggests that Q4 GDP growth could surpass 3.0%, signaling significant momentum heading into 2026.

However, a closer look reveals a split between this data-driven optimism and the considerable headwinds facing the economy. Let's break down the bull case, the bear case, and why the upcoming GDP report on January 29, 2026, is so critical for markets and policymakers.

Prediction Markets Signal Strong Growth

Modern forecasting tools like prediction markets, where traders bet on economic outcomes, have become influential gauges of market sentiment. Platforms like Kalshi are showing strong positioning for Q4 GDP growth to exceed the 3.0% threshold.

This confidence is largely fueled by the Atlanta Fed's GDPNow model, a real-time tracker that estimates growth based on incoming economic data. As of January 9, 2026, the model projected a surprisingly robust 5.1% GDP growth for Q4 2025. While not an official forecast, the GDPNow model has a respectable track record, with an average absolute error of just 0.77 percentage points since its 2011 inception.

Figure 1: Prediction market data from Kalshi indicates rising confidence in Q4 2025 GDP growth, with forecasts trending toward 3.5% by early January 2026.

The Bull Case: Drivers of Economic Momentum

Several key factors are supporting the optimistic growth scenario:

• Resilient Consumer Spending: Personal consumption remains the engine of the U.S. economy, growing at a revised 3.0% rate in early Q4, according to GDPNow. Dallas Federal Reserve data shows that the top 20% of earners were responsible for about 57% of consumer spending through mid-2025.

• A Surge in Exports: Net exports provided a major boost, adding an estimated 1.97 percentage points to GDP. This reversal of earlier trade drags suggests strong foreign demand for American goods.

• The AI Investment Boom: Business investment in artificial intelligence continues at a rapid pace. Bureau of Economic Analysis data showed a 20.4% year-over-year jump in information-processing equipment investment and a 12.2% rise in software spending in Q2 2025.

• Steady Government Spending: Expenditures at both the federal and state levels rose in Q3, particularly in defense and local government spending, a trend that appears to have continued into Q4.

• A Strong Q3 Foundation: The economy entered the fourth quarter with solid momentum, having posted 4.3% annualized growth in Q3 2025, according to the BEA's initial estimate.

The Bear Case: Headwinds That Could Stall Growth

Despite the positive signals, significant risks could pull the final GDP number below 3.0%:

• Mounting Tariff Pressure: The average effective tariff rate rose from 2.5% at the start of 2025 to over 10% by August. Goldman Sachs estimated that this increase trimmed about 0.6% from GDP in the second half of the year. Separately, Yale's Budget Lab projects tariffs will reduce real GDP growth by 0.5 percentage points in 2025 and 0.4 percentage points in 2026.

• A Cooling Labor Market: The unemployment rate hit a four-year high of 4.6% in November 2025. Job growth has slowed significantly, averaging around 130,000 per month in late 2025 compared to 1.8 million in 2024. A weakening job market typically leads to reduced consumer spending.

• Inventory Adjustments: Businesses that front-loaded inventory purchases in early 2025 to avoid tariffs may now be drawing down those stockpiles. This reversal could create a drag on GDP, as inventory changes can cause large swings in quarterly figures.

• A Projected Consumer Slowdown: Forecasters anticipate a slowdown in spending. Deloitte’s Q4 economic forecast projects consumer spending growth will fall to 1.6% in 2026 from 2.6% in 2025. Morgan Stanley expects nominal spending growth to cool to 2.9% in 2026.

• Weakness in Housing: Real residential investment contracted sharply, dropping from 1.5% growth to -5.8% in the January 9 GDPNow update. With mortgage rates staying between 6.6% and 7% in late 2025, the housing sector remains a significant weak spot.

What Traditional Forecasters Expect

In contrast to the high GDPNow reading, traditional economic forecasts remain more conservative.

• The Federal Reserve Bank of Philadelphia's Survey of Professional Forecasters projects annual GDP growth of 1.9% for 2025 and 1.8% for 2026.

• Goldman Sachs forecasts 2.1% growth for 2025, citing larger-than-expected tariff impacts. For 2026, they expect 2.6% growth, helped by tax cuts and declining interest rates.

• Deloitte anticipates 1.9% growth in 2026, down from an estimated 2.0% in 2025, due to slowing consumer spending and tariff pressures.

Why This GDP Report Is Critical

The Q4 2025 GDP estimate, due on January 29, 2026, will offer the first clear picture of how the economy managed the dual pressures of high tariffs and a softer labor market.

More importantly, this report will heavily influence Federal Reserve policy in 2026. The Fed has already cut interest rates by 175 basis points since September 2024, bringing the federal funds rate to a range of 3.5%-3.75%. Any further cuts will depend on the trade-off between growth and inflation, making this GDP print a crucial data point for future monetary policy decisions.

The Final Verdict: Balancing Optimism and Risk

While the Atlanta Fed's GDPNow model points to a strong possibility of growth exceeding 3.0%, its historical root-mean-squared error of 1.17 percentage points means the final figure could land in a wide range.

The prediction markets are betting that the economy's core strengths—AI investment and spending by high-income consumers—will overcome the drags from trade policy and a cooling job market. The upcoming report will reveal whether that bet pays off. For traders and investors, the key is not just to predict a single outcome but to manage risk across a range of possibilities.