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EndGame Macro
A Strong GDP Print That Deserves a Second Look
The headline sounds great where real GDP grew at a 4.3% annual rate in Q3 2025, up from 3.8% in Q2. In plain terms, that’s about 1.1% growth for the quarter, just expressed at an annualized pace.
But once you dig into what actually drove that number, it feels less like the economy is firing on all cylinders and more like the math lined up in a way that flatters the moment.
What’s Actually Driving The 4.3%
The BEA is pretty explicit about the mix…
• Consumers carried the load. Consumer spending added about +2.39 percentage points to GDP.
• Trade did a lot of the work. Net exports added +1.59 points, more than a third of the entire print.
• Government helped. Government spending added about +0.39 points, with defense a key contributor.
• Investment barely mattered. Gross private domestic investment contributed roughly -0.02 points, essentially flat.
So growth was strong, but not broad. It was consumption plus a big trade swing plus government, with private investment largely absent.
Why GDP Can Look Better Than It Feels
This is where the report gets quietly revealing.
First, falling imports boost GDP even when that’s not healthy. Imports are subtracted in the GDP formula. So when imports fell (-4.7%), GDP automatically looked stronger. Sometimes that means more domestic production. But often it means cooling demand, inventory drawdowns, or households trading down. GDP treats all of that as a positive either way.
Second, government spending counts the same as private demand. Government spending rose (+2.2%), lifting GDP. But that doesn’t tell you whether the private economy is getting healthier, or whether we’re leaning harder on the public balance sheet to keep growth afloat.
Third, income is telling a softer story than output. This is the biggest tell…
•Real GDP: +4.3%
•Real GDI: +2.4%
•Average of GDP and GDI: +3.4%
When GDP runs almost 2 points hotter than GDI, it’s a sign output looks stronger than incomes can really support. The statistical discrepancy hit 1.2% of GDP, which is basically the data saying these stories don’t fully line up. That 3.4% average is often a more honest read than the 4.3% headline.
Fourth, consumers are spending but incomes aren’t rising. Yes, consumer spending here is inflation adjusted. Real PCE rose +3.5%. But real disposable personal income was flat (0.0%). That gap gets filled by lower saving, more credit, or pulling spending forward. Sure enough, the saving rate fell to 4.2%, down from 5.0% in Q2. That’s not collapse but it is less cushion.
Where The Weakness Is Hiding
Look at the interest sensitive parts…
•Residential investment: -5.1%
•Structures (commercial investment): -6.3%
That’s the economy’s future capacity moving backward. Housing and commercial structures are classic late cycle casualties of high rates. On top of that, private inventory investment declined, dragging on overall investment.
This wasn’t clean, non inflationary growth…
• Gross domestic purchases price index: +3.4%
• PCE price index: +2.8%
• Core PCE: +2.9%
All of these accelerated versus Q2. Part of why nominal GDP looks so strong (current dollar GDP +8.2%) is simply that prices are still rising fast enough to pad the numbers.
My View
This report doesn’t read like all clear. It reads like late cycle resilience the kind that can look fine until it doesn’t.
• The consumer is still spending, but with flat real income and lower saving.
• Investment, especially housing and structures, isn’t confirming the optimism.
• The GDP–GDI gap says the strength isn’t fully backed by incomes.
• And data delays tied to the government shutdown raise the odds of revisions later.
So if someone wants to victory lap 4.3% GDP, the pushback is show me the same strength in private investment, in real incomes, and in a narrowing GDP-GDI gap. That’s when growth is real and durable. tweet
A Strong GDP Print That Deserves a Second Look
The headline sounds great where real GDP grew at a 4.3% annual rate in Q3 2025, up from 3.8% in Q2. In plain terms, that’s about 1.1% growth for the quarter, just expressed at an annualized pace.
But once you dig into what actually drove that number, it feels less like the economy is firing on all cylinders and more like the math lined up in a way that flatters the moment.
What’s Actually Driving The 4.3%
The BEA is pretty explicit about the mix…
• Consumers carried the load. Consumer spending added about +2.39 percentage points to GDP.
• Trade did a lot of the work. Net exports added +1.59 points, more than a third of the entire print.
• Government helped. Government spending added about +0.39 points, with defense a key contributor.
• Investment barely mattered. Gross private domestic investment contributed roughly -0.02 points, essentially flat.
So growth was strong, but not broad. It was consumption plus a big trade swing plus government, with private investment largely absent.
Why GDP Can Look Better Than It Feels
This is where the report gets quietly revealing.
First, falling imports boost GDP even when that’s not healthy. Imports are subtracted in the GDP formula. So when imports fell (-4.7%), GDP automatically looked stronger. Sometimes that means more domestic production. But often it means cooling demand, inventory drawdowns, or households trading down. GDP treats all of that as a positive either way.
Second, government spending counts the same as private demand. Government spending rose (+2.2%), lifting GDP. But that doesn’t tell you whether the private economy is getting healthier, or whether we’re leaning harder on the public balance sheet to keep growth afloat.
Third, income is telling a softer story than output. This is the biggest tell…
•Real GDP: +4.3%
•Real GDI: +2.4%
•Average of GDP and GDI: +3.4%
When GDP runs almost 2 points hotter than GDI, it’s a sign output looks stronger than incomes can really support. The statistical discrepancy hit 1.2% of GDP, which is basically the data saying these stories don’t fully line up. That 3.4% average is often a more honest read than the 4.3% headline.
Fourth, consumers are spending but incomes aren’t rising. Yes, consumer spending here is inflation adjusted. Real PCE rose +3.5%. But real disposable personal income was flat (0.0%). That gap gets filled by lower saving, more credit, or pulling spending forward. Sure enough, the saving rate fell to 4.2%, down from 5.0% in Q2. That’s not collapse but it is less cushion.
Where The Weakness Is Hiding
Look at the interest sensitive parts…
•Residential investment: -5.1%
•Structures (commercial investment): -6.3%
That’s the economy’s future capacity moving backward. Housing and commercial structures are classic late cycle casualties of high rates. On top of that, private inventory investment declined, dragging on overall investment.
This wasn’t clean, non inflationary growth…
• Gross domestic purchases price index: +3.4%
• PCE price index: +2.8%
• Core PCE: +2.9%
All of these accelerated versus Q2. Part of why nominal GDP looks so strong (current dollar GDP +8.2%) is simply that prices are still rising fast enough to pad the numbers.
My View
This report doesn’t read like all clear. It reads like late cycle resilience the kind that can look fine until it doesn’t.
• The consumer is still spending, but with flat real income and lower saving.
• Investment, especially housing and structures, isn’t confirming the optimism.
• The GDP–GDI gap says the strength isn’t fully backed by incomes.
• And data delays tied to the government shutdown raise the odds of revisions later.
So if someone wants to victory lap 4.3% GDP, the pushback is show me the same strength in private investment, in real incomes, and in a narrowing GDP-GDI gap. That’s when growth is real and durable. tweet
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Wasteland Capital
Q3 GDP +4.3%. Wow. Absolutely nuts.
Roaring consumer spend. Imports weak, exports up (tariff effect). Investment still weak (due to high uncertainty). Government spend recovery.
Now imagine the upcoming AI investment acceleration on top… https://t.co/CLYgwUfkuL
tweet
Q3 GDP +4.3%. Wow. Absolutely nuts.
Roaring consumer spend. Imports weak, exports up (tariff effect). Investment still weak (due to high uncertainty). Government spend recovery.
Now imagine the upcoming AI investment acceleration on top… https://t.co/CLYgwUfkuL
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EndGame Macro
Personal Income & Outlays And How Health Care Spending Is Masking Consumer Weakness
If you step back from the headlines and just follow the money, this report tells a pretty clear story. The consumer is still spending, but the way they’re doing it matters, and that’s where the stress starts to show.
The core question isn’t is spending up?
It’s whether income growth is strong enough to support that spending without eating into the buffer.
Right now, the answer is no.
Income Is Rising But Buying Power Is Not
On paper, September looks fine…
• Personal income: up 0.4%
• Disposable personal income: up 0.3%
But once you strip out inflation, the picture softens fast…
• Real disposable income: up just 0.1%
• Real income per person: basically flat month to month
So incomes are growing in name, but what households can actually feel hasn’t changed much at all. That’s usually the first crack.
Spending Is Still Rising And Savings Are Filling The Gap
Spending didn’t slow in September…
• Personal consumption: up 0.4%
• Total outlays: also up 0.4%
But that spending outpaced income again. The way it balanced wasn’t higher pay, it was lower saving…
• Personal saving rate: down to 4.0%
• That’s steadily lower than earlier this year, when it was closer to 5.5%
This isn’t a one month quirk. It’s a trend. Households are keeping things going by giving up cushion, not because their income picture is improving.
Health Care Is Quietly Doing A Lot Of The Work
Here’s a piece that often gets overlooked.
Health care including health insurance and medical services now makes up roughly 17% of all consumer spending. And it’s one of the areas still growing.
That matters because…
• Health spending is mostly non discretionary. People don’t choose more medical bills the way they choose a vacation.
• A large share is paid by employers or the government, but it still shows up as consumer spending in the data.
• Insurance is measured as a service, which can rise even as households feel squeezed by premiums and out of pocket costs.
So consumer spending can look strong even when households themselves feel worse off. A lot of this growth is people paying unavoidable bills, not leaning into new demand.
Are People Buying More, Or Just Paying More?
The real versusbnominal split answers that…
• Nominal spending: up 0.4%
• Prices: up 0.3%
• Real spending: only +0.1%
And the mix is telling…
• Goods: down 0.3%
• Durables: down 0.4%
• Nondurables: down 0.3%
• Services: up 0.3%
People are pulling back on things and still paying for services, especially the ones they can’t avoid. That’s a very familiar late cycle pattern.
The Weak Spots Are Showing
A few areas stand out as pressure points…
• Big ticket items are rolling over. Cars, appliances, and other durables are slipping first, which is typical when rates stay high.
• Interest costs are creeping up. Personal interest payments rose again, quietly eating into cash flow.
• Spending is running ahead of income over the year.
• Real income: up about 1.5% year over year
• Real spending: up about 2.4%
That gap doesn’t close on its own. It gets closed by lower savings or more debt and right now it’s savings doing the work.
What Stands Out Most
The big takeaway is this…
Consumer spending is being propped up by momentum and mandatory expenses, not by rising real income or renewed confidence.
That doesn’t mean recession has arrived. But it does mean the system is getting tighter. Goods are weakening. Savings are thinning. Services especially health care are carrying more of the load.
My View
September shows an economy that’s still moving forward, but increasingly on inertia rather than fresh strength. Historically, that’s not where expansions end but it is where they start to lose their balance.
tweet
Personal Income & Outlays And How Health Care Spending Is Masking Consumer Weakness
If you step back from the headlines and just follow the money, this report tells a pretty clear story. The consumer is still spending, but the way they’re doing it matters, and that’s where the stress starts to show.
The core question isn’t is spending up?
It’s whether income growth is strong enough to support that spending without eating into the buffer.
Right now, the answer is no.
Income Is Rising But Buying Power Is Not
On paper, September looks fine…
• Personal income: up 0.4%
• Disposable personal income: up 0.3%
But once you strip out inflation, the picture softens fast…
• Real disposable income: up just 0.1%
• Real income per person: basically flat month to month
So incomes are growing in name, but what households can actually feel hasn’t changed much at all. That’s usually the first crack.
Spending Is Still Rising And Savings Are Filling The Gap
Spending didn’t slow in September…
• Personal consumption: up 0.4%
• Total outlays: also up 0.4%
But that spending outpaced income again. The way it balanced wasn’t higher pay, it was lower saving…
• Personal saving rate: down to 4.0%
• That’s steadily lower than earlier this year, when it was closer to 5.5%
This isn’t a one month quirk. It’s a trend. Households are keeping things going by giving up cushion, not because their income picture is improving.
Health Care Is Quietly Doing A Lot Of The Work
Here’s a piece that often gets overlooked.
Health care including health insurance and medical services now makes up roughly 17% of all consumer spending. And it’s one of the areas still growing.
That matters because…
• Health spending is mostly non discretionary. People don’t choose more medical bills the way they choose a vacation.
• A large share is paid by employers or the government, but it still shows up as consumer spending in the data.
• Insurance is measured as a service, which can rise even as households feel squeezed by premiums and out of pocket costs.
So consumer spending can look strong even when households themselves feel worse off. A lot of this growth is people paying unavoidable bills, not leaning into new demand.
Are People Buying More, Or Just Paying More?
The real versusbnominal split answers that…
• Nominal spending: up 0.4%
• Prices: up 0.3%
• Real spending: only +0.1%
And the mix is telling…
• Goods: down 0.3%
• Durables: down 0.4%
• Nondurables: down 0.3%
• Services: up 0.3%
People are pulling back on things and still paying for services, especially the ones they can’t avoid. That’s a very familiar late cycle pattern.
The Weak Spots Are Showing
A few areas stand out as pressure points…
• Big ticket items are rolling over. Cars, appliances, and other durables are slipping first, which is typical when rates stay high.
• Interest costs are creeping up. Personal interest payments rose again, quietly eating into cash flow.
• Spending is running ahead of income over the year.
• Real income: up about 1.5% year over year
• Real spending: up about 2.4%
That gap doesn’t close on its own. It gets closed by lower savings or more debt and right now it’s savings doing the work.
What Stands Out Most
The big takeaway is this…
Consumer spending is being propped up by momentum and mandatory expenses, not by rising real income or renewed confidence.
That doesn’t mean recession has arrived. But it does mean the system is getting tighter. Goods are weakening. Savings are thinning. Services especially health care are carrying more of the load.
My View
September shows an economy that’s still moving forward, but increasingly on inertia rather than fresh strength. Historically, that’s not where expansions end but it is where they start to lose their balance.
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The Few Bets That Matter
$PATH trades below 4.5x forward sales with a clear ARR and RPO acceleration while Maestro is only starting to be deployed and management guided to continuous acceleration.
I'll take it and say thanks. https://t.co/rAQHalZEYw
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$PATH trades below 4.5x forward sales with a clear ARR and RPO acceleration while Maestro is only starting to be deployed and management guided to continuous acceleration.
I'll take it and say thanks. https://t.co/rAQHalZEYw
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The Few Bets That Matter
$PATH trades below 4.5x forward sales with ARR & RPO acceleration while Maestro is starting to be deployed and management guided to continuous acceleration. https://t.co/MYdHf3wXLm
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$PATH trades below 4.5x forward sales with ARR & RPO acceleration while Maestro is starting to be deployed and management guided to continuous acceleration. https://t.co/MYdHf3wXLm
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The Few Bets That Matter
$NVO is still not a great buy today.
But this FDA aproval might be the kick the company needed to see growth again - and therefore multiple expansions.
Although it is said to come at a low price to capture market shares first, which is a big deal as the market will want to see adoption before any rewards.
Still worth keeping an eye on.
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$NVO is still not a great buy today.
But this FDA aproval might be the kick the company needed to see growth again - and therefore multiple expansions.
Although it is said to come at a low price to capture market shares first, which is a big deal as the market will want to see adoption before any rewards.
Still worth keeping an eye on.
$NVO is NOT cheap and NOT a buy right now.
GLP-1 was supposed to drive growth but market share is slipping in favor of competition. Growth guidance was cut twice and there are no near-term catalysts nor clarity on what the future will be like.
Lower growth → lower cash generation → lower multiples.
This is how the market works. Comparing today's valuation to the last two years' is like comparing apples to bananas. Conditions changed.
$NVO is a fantastic company. Just not a great stock, yet. There are no reasons to rush any purchase, better be patient. tweet
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The Few Bets That Matter
Did not really expect such numbers, especially for consumption - even though healthcare is mostly responsible of such growth.
There's a reason to why the market anticipated on this sector already. https://t.co/mky3abEqWp
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Did not really expect such numbers, especially for consumption - even though healthcare is mostly responsible of such growth.
There's a reason to why the market anticipated on this sector already. https://t.co/mky3abEqWp
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The Few Bets That Matter
$GOLD is up ~70% YTD.
$SILVER is up ~142% YTD.
Both moves reflect a growing lack of trust in fiat currencies and the global financial system, including the U.S. dollar.
Gold and silver capitalizations are ~2.25x and ~17.8x that of $BTC. That gap is the Bitcoin bull case.
A time will come when Bitcoin will no longer be distorted by bad actors and excessive leverage, and Iistitutionalization is accelerating that process - through ETF and hedge funds interests.
When that happens, there is no reason for $BTC to be worth less than $GOLD over the long term.
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$GOLD is up ~70% YTD.
$SILVER is up ~142% YTD.
Both moves reflect a growing lack of trust in fiat currencies and the global financial system, including the U.S. dollar.
Gold and silver capitalizations are ~2.25x and ~17.8x that of $BTC. That gap is the Bitcoin bull case.
A time will come when Bitcoin will no longer be distorted by bad actors and excessive leverage, and Iistitutionalization is accelerating that process - through ETF and hedge funds interests.
When that happens, there is no reason for $BTC to be worth less than $GOLD over the long term.
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Quiver Quantitative
🚨 We're doing a holiday sale on Quiver.
Most of our stuff is free, but premium is pretty nice for live data alerts and helps support the rest of the site.
Half-off if you sign up before NYE.
Join here: https://t.co/2NJaK51aVx https://t.co/tWdU7v415E
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🚨 We're doing a holiday sale on Quiver.
Most of our stuff is free, but premium is pretty nice for live data alerts and helps support the rest of the site.
Half-off if you sign up before NYE.
Join here: https://t.co/2NJaK51aVx https://t.co/tWdU7v415E
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