Some investors believe recent US economic data may be presenting an overly optimistic picture.
If true, this could matter for markets. Here’s why ⬇️
Over the past week, two major US data points were released:
• CPI inflation
• US Q3 GDP
Both came in much stronger than expected, but not everyone is convinced the full picture is being shown.
1) CPI data
Headline CPI came in at 2.7% vs 3.1% expected.
Core CPI dropped to 2.6%, the lowest level in over 4 years.
On the surface, very positive.
However, some analysts point out that certain components (such as food and shelter-related costs) may have had limited influence due to data collection constraints during the government shutdown.
This has led to debate about whether inflation pressures are being understated.
2) US GDP
US Q3 GDP printed at 4.3%, the strongest growth since Q4 2023.
That suggests a strong economy but again, there are questions.
A significant portion of growth appears to be driven by AI-related investment and intra-sector activity, while personal disposable income growth remained nearly flat.
This raises concerns about how broad-based the growth really is.
So why aren’t markets crashing?
One explanation: markets may already be pricing in these doubts.
Currently we’re seeing:
• Inflation showing signs of re-acceleration
• Economic growth momentum slowing beneath the surface
Historically, this combination often leads to one outcome:
👉 Strength in precious metals
Which is exactly what we’re seeing now.
