The data is coming in—and it is starting to look genuinely impressive.
Yesterday’s GDP report showed the U.S. economy grew at a 4.3% annualized rate in the third quarter of 2025. That followed an already strong 3.8% pace in the prior quarter and materially surpassed consensus expectations in the 3.2%–3.3% range.
This rate of growth exceeds long-term trends. For context, real GDP growth has averaged just 2.0%–2.5% over the past two decades.
By almost any objective measure, the economy is performing well. Growth is strong, the stock market is at all-time highs, and inflation continues to ease.
This was a blowout GDP report.
And yet, most Americans seem to believe the economy is headed in the wrong direction.
Gallup’s Economic Confidence Index has fallen to its lowest level since July 2024, with more than two-thirds of respondents saying economic conditions are deteriorating.
Economic sentiment is shaped less by hard data than by media coverage and political framing. It does not always track underlying fundamentals. Right now, it clearly is not.
We see this disconnect as temporary. There are real pockets of weakness, and not everyone is benefiting equally from today’s economy. But at the aggregate level, growth remains solid and broad-based.
One key factor weighing on public confidence is the recent uptick in the unemployment rate, which is paired with growing anxiety around AI-driven job displacement. Those concerns deserve scrutiny.
As we discuss below, a closer look at labor market dynamics tells a far more constructive story, particularly in the private sector.
And to the extent AI-driven productivity gains introduce modest slack in employment, they also create room for easier monetary policy ahead, which would be a boon to the economy as a whole and investors in particular.
Making sense of the shift
When Donald Trump was elected just over a year ago, markets cheered. Under the Biden administration, economic policy was tilted in the direction of higher taxes, larger government, restrictions on energy production, and heavier regulation.
Trump repudiated all of that.
His economic agenda emphasized growth, innovation, energy abundance and industrial renewal. He offered the promise of a new Golden Age of prosperity that would come from unleashing the power of American ingenuity as well as the country’s vast natural resources.
