The Economic Context Heading into Q3 Before examining potential revisions, it is important to understand the environment entering the third quarter. Consumer Spending Consumer spending remained the primary driver of U.S. economic growth. Despite high interest rates and persistent inflation, households continued to spend on services such as travel, healthcare, and entertainment. Wage growth and employment stability supported consumption, although savings rates declined and consumer debt increased—signs of underlying stress. Labor Market The labor market remained relatively tight, with unemployment near historic lows. However, indicators such as slower job creation, declining job openings, and rising part-time employment suggested gradual cooling. This signaled resilience rather than acceleration. Business Investment Business investment showed mixed performance. Technology and productivity-related investments remained strong, while capital-intensive sectors such as real estate and manufacturing faced pressure from higher borrowing costs. Inventory accumulation also became more cautious as companies adjusted to uncertain demand. Government Spending and Trade Government spending continued to support growth, particularly in infrastructure and defense. Net exports remained volatile, influenced by global demand and a strong U.S. dollar, which weighed on export competitiveness. This backdrop created conditions where growth appeared solid, but potentially uneven—making revisions especially relevant. The Initial Q3 GDP Narrative The initial Q3 GDP estimate suggested that the U.S. economy was growing at a strong pace, reinforcing optimism around a “soft landing.” Markets interpreted this as evidence that the economy could withstand high interest rates without tipping into recession. Key contributors to the initial estimate included: Strong consumer spending Government expenditures Inventory accumulation