Barclays: Strong US GDP Highlights Risk of Fewer Rate Cuts by the Fed

Barclays economists stated in a report that the Federal Reserve may view the unexpectedly accelerated growth of the US GDP in the third quarter as a signal of strong domestic demand. These economists mentioned that while the contribution of volatile components such as net exports may exaggerate the strength of the economy, consumer spending continued to grow driven by both services and goods demand. They also stated that domestic private final purchases increased by 3.0% on a quarter-on-quarter basis, similar to the 2.9% growth in the second quarter, highlighting the risk of the Federal Reserve reducing its rate cuts. After an uneven performance in the first half of 2025, total demand maintained significant growth momentum by the end of the year. Barclays has raised its year-on-year growth forecast for the fourth quarter of 2025 by approximately 0.3 percentage points, to 2.0%.