Jefferies' Thomas Simons: There's a ‘really big disconnect' between Q3 GDP and payroll growth

Economic Overview - The third quarter of 2025 has shown a disconnect between GDP growth and payroll growth, indicating potential measurement issues or a surge in productivity [4] - Jobless claims have remained steady, yet there has been no significant change in the unemployment rate, suggesting underlying economic complexities [3] Consumer Behavior - Consumer spending has been robust, particularly in healthcare, despite low consumer sentiment, creating optimism for the upcoming quarters [6] - There is a notable difference between consumer sentiment and actual spending, with consumer spending in Q3 being exceptionally high, potentially unsustainable moving forward [6][8] Trade and GDP Contributions - The trade deficit numbers have not shown significant changes between Q2 and Q3, yet net exports contributed 1.6% to GDP, raising questions about the sustainability of this contribution [4][9] - Concerns exist regarding the reliability of trade as a growth driver in the near term, with expectations of a potential reset in Q4 [5][6] Future Projections - There is an expectation of a "give back" in Q4, with estimates suggesting a possible reduction in growth due to the unsustainable nature of Q3's performance [7][9] - The anticipated growth in Q4 may be negatively impacted by the overperformance in Q3, with a potential starting point for Q4 growth being around 2.5% lower than previously expected [9][10]