Global Data Pod Global Data Pod Weekender: Strong but shaky growth
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Sep 26, 2025 Joe Lupton, a macroeconomist renowned for his insights on consumption and labor markets, joins the discussion on global growth dynamics. They explore why GDP is strong despite dismal job growth, examining the puzzling disconnect. Lupton delves into the factors driving resilient US consumer spending and the risks ahead with declining labor income. They also assess the impact of AI on job creation and productivity, and ponder how central banks should respond to this mixed economic landscape, including potential effects of a US government shutdown.
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Labor Income Lags Productivity
- Labor income growth is decelerating even as productivity surges in Q3.
- That divergence could compress household purchasing power if wages keep lagging.
Prepare For Q4 Labor-Income Drag
- Prepare for a material hit to real labor income in Q4 and plan cashflow accordingly.
- Anticipate a consumer saving-rate adjustment because households may smooth consumption now but face weaker incomes next quarter.
Consumption Fueled By Falling Saving
- US consumption strength in Q3 partly reflects a half-point fall in the saving rate.
- That suggests households are front-loading spending and may be vulnerable if income growth remains weak.