Lots of Economic News to Digest

By: Ben Dolan, CFP®

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Last week was jam-packed with economic news! In the chance you were in the mountains leaf-peeping or just enjoying some time with your kids over Halloween or fall break, we wanted to bring you up to speed. The economy, Anthropic filing for an IPO, and interest rates were all in the headlines. Here are the facts you need to know:

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• Real GDP grew at a 3.4% annual rate in the third quarter, above consensus estimates of 3.2%. Importantly, domestic demand across consumers and businesses was strong. This is measured by "real final sales to private domestic purchasers," which grew 4.9% over the quarter.
• Business investment jumped to 3.3%, one of the strongest levels in recent years. At the same time, net exports detracted from GDP growth with exports surpassing imports. Overall, these are consistent with many trends driving the economy, including the buildout of AI infrastructure. This requires heavy business investment and the import of semiconductors manufactured abroad.
• Consumer spending grew at a very healthy pace of 2.5%. This spending has helped to support GDP growth over the past several years, even though consumers feel pessimistic about the economy and inflation. This disconnect has only grown this year as concerns over the labor market have increased due to weak job gains. Still, ongoing spending has helped to support both the economy and corporate profits.
• Inflation cooled sharply by one measure, the PCE price index. It rose just 2.1% in Q3, down from 5.0% in Q2. This is in contrast to other inflation reports, such as the Consumer Price Index, which has been impacted by higher energy prices.
• Anthropic, the company behind the Claude AI assistant, publicly filed for an IPO on October 26, seeking to list on the Nasdaq under the ticker ANT. Reports suggest a potential valuation of $1.5 to $2 trillion, which could make it one of the largest IPOs on record. This follows SpaceX's historic IPO earlier this year. The company reported revenue of $11.6 billion in the second quarter of 2026, up dramatically from a year earlier, though it also reported an $80.7 billion net loss in the first half of 2026, largely due to a significant accounting charge tied to financing agreements.
• IPO activity tends to come in waves during periods of investor enthusiasm, and the current AI boom is no different. However, some investors are growing more cautious about heavy infrastructure spending, corporate borrowing, and negative cash flow in the tech sector, which could affect how new AI listings are received by the market. Intel and Alphabet both experienced significant stock declines following disappointing financial results and concerns about their future growth. Intel's stock plunged approximately 28.6% after issuing a weaker-than-expected fourth-quarter forecast, citing manufacturing constraints, rising costs, and continued weakness in PC demand. Alphabet's stock dropped approximately 12.6% after investors reacted negatively to slowing search advertising growth, disappointing earnings, and increasing concerns over the massive costs of its artificial intelligence investments.
• Investors are often curious about investing in IPOs, especially when there seems to be market excitement. This is a complex topic because much of the gains from investing in these companies accrue to those who invested much earlier, at great risk. Once a company goes public, its stock price can be volatile, as has been the case with SpaceX over the past few months. Individual investors often do not participate in IPOs directly at the offering price, and company insiders typically face lock-up periods of around 180 days before they can sell their shares, which can create selling pressure when those periods expire.
• Rather than focusing on the IPOs themselves, long-term investors naturally gain exposure to successful public companies over time, since major stock market indices incorporate new listings as companies grow. So, one major benefit of these IPOs to all investors is that there are more publicly traded companies in which to invest.
• The Federal Reserve decided to keep interest rates unchanged at a target range of 3.75%–4%, following September's quarter-point rate increase. The Fed cited persistent inflation and a strong economy as reasons to maintain current rates while waiting for additional economic data before making further decisions. However, two Fed officials disagreed with the decision and favored another rate hike, signaling that borrowing costs could remain elevated or increase again before the end of the year.

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Stay tuned for more economic updates as we move into the second half of Q4.