'The Fed can continue to lower interest rates' next year, Bessent advisor says

Economic Growth - The third quarter GDP increased by 4.3%, exceeding expectations by a full percentage point, primarily driven by consumer spending which rose by 3.5%, largely due to healthcare spending [2][4] - The economy is projected to grow at around 3% in the fourth quarter, which would result in an annual growth rate just under 3% for the year [4][5] Consumer Spending - Consumer goods spending in real terms increased by over 3%, with recreation and transportation spending both rising around 7% [3] - There was a broad-based gain in consumer spending services, supported by strong holiday shopping trends [3] Business Investment - Capital expenditures (capex) grew over 5%, although business investment slowed to 2.8% from a previous 7% [5] - Investment in non-residential structures contracted at a pace of 6.3%, attributed to high interest rates and uncertainty regarding future guidelines for factory expensing [5][8] Interest Rates and Monetary Policy - The Federal Reserve may continue to lower interest rates if the economy sustains a 3% growth pace, as this could lead to lower inflation [12][14] - Current economic conditions suggest that the Fed's monetary policy could become more accommodative, especially if real rates rise while inflation falls [12][14] Labor Market Dynamics - There is a noted decoupling between GDP growth and job market performance, with a temporary lag in job creation despite strong GDP figures [14][17] - The private sector has shown significant GDP growth, which is expected to lead to increased hiring and higher-paying jobs in the future [17][20] Consumer Sentiment - Despite strong GDP growth, consumer sentiment has declined to levels not seen since April, with many consumers feeling the impact of rising costs [18][19] - The expectation is that job growth and higher wages will improve affordability issues for American families over time [19][20]