The U.S. economy is experiencing a paradoxical phase—a "summer of growth" alongside a "winter of employment."

The delayed release of the U.S. Q3 GDP showed a quarter-on-quarter annualized growth of 4.3% (vs. expectations of 3.3%), while year-on-year growth rebounded to 2.3%, still notably lower than last year’s 2.8%. Despite the seemingly robust headline figure, structural and micro-macro divergences are widening—highlighting an economy caught between expansion and labor market weakness.

**Structural Breakdown** Household consumption and net exports drove the Q3 growth, contributing 2.4 and 1.6 percentage points, respectively. However, consumption trends reveal disparities and potential overestimation, while net export gains reflect lingering "import surges." Meanwhile, investment growth is slowing, with a widening gap between AI-related and non-AI sectors.

**Key Observations** 1. **Non-Cyclical Strength vs. Cyclical Weakness** AI-related investment growth, though decelerating in Q3, remained the fastest-growing segment. However, cyclical sectors—such as durable goods (autos, furniture) and residential investment—continued to decline, raising doubts about the efficacy of rate cuts in reviving traditional economic activity.

2. **Broad Consumption vs. Narrow Weakness** While private consumption appeared strong, underlying data shows divergence: healthcare (necessity), international travel (affluent spending), and entertainment drove gains, while broader service demand (e.g., dining out, transportation) lacked seasonal momentum. Excluding healthcare and travel, core service consumption growth was stable but unremarkable.

3. **Growth vs. Employment Mismatch** The Q3 growth surge coincided with rising unemployment and slowing job creation—a disconnect explained by growth concentrating in sectors with low labor demand (e.g., tech, finance). This casts doubt on premature claims of productivity gains.

**Policy Dilemma** Monetary policy faces conflicting signals: growth suggests tighter measures, while employment calls for easing. With labor market softness persisting and consumer confidence near April’s lows, a dovish tilt may be warranted.

**Risks Ahead** - Policy uncertainty under Trump could trigger financial volatility and capital flight. - Global tariff impacts may accelerate synchronized easing in 2026, easing long-term rate pressures. - Technological breakthroughs could reshore manufacturing, cutting U.S. costs and spurring credit demand.

In summary, growth’s apparent strength masks underlying fragility, while employment woes show no signs of abating—leaving policymakers navigating a dual-track challenge.