U.S. economic growth surprised to the upside as consumer spending and corporate earnings remained resilient, even as hiring slowed. With inflation easing and the Federal Reserve beginning to cut rates, financial conditions have become more supportive heading into 2026. Our latest quarterly review explores what this environment may mean for markets and long-term investors.

The U.S. economy showed resilience in the third quarter, as easing inflation, strong corporate earnings, and improving productivity helped extend the market’s steady advance.

In a quarter dominated by trade policy headlines, markets rallied on economic resilience over tariff bluster.

The “Liberation Day” tariff announcement took markets by surprise, and the response was sharply negative.

By nearly every fundamental metric, the U.S. economy had a stellar year in 2024. Latest estimates suggest real GDP likely grew 2.8% last year (which is above trend), inflation fell to 2.4% year-over-year in November, productivity in the private sector increased by more than 2%, and S&P 500 operating earnings increased by 9%.

Stocks followed.