Data delayed by government shutdown shows GDP, inflation growth
After delaying its release due to the government shutdown, the US Bureau of Economic Analysis released Q3 gross domestic product (GDP) and personal consumption expenditures (PCE) inflation figures on Tuesday.
Both figures increased over the second quarter of the year. The GDP increased by 4.3% in Q3, up from 3.8% in Q2.
More interesting to mortgage brokers is that inflation increased 2.8% in Q3, and the core PCE increased 2.9%, up from the 2.6% increase in Q2.
Mike Fratantoni, SVP and chief economist with Mortgage Bankers Association (MBA), said the PCE data is well above the Fed’s stated goal of 2.0% inflation, and he thinks it will cause them to slow things down heading into 2026.
“These data, along with the recently released employment and CPI metrics, show an economy that is growing, but unevenly, and one where inflation is still running well above the FOMC’s target,” Fratantoni said. “We forecast that the FOMC will be on hold at its January meeting, and will likely cut rates just once more next year.”
Economic growth strong
One thing that Fed chair Jerome Powell cited as a positive in his post-FOMC press conference was the continued expansion of the US economy despite all the headwinds of 2025.
That continued to show up in this report, with consumer spending accounting for the largest share of the increase in GDP. Government, exports, and imports all increased slightly.
“The initial read on third-quarter GDP growth showed an economy that was growing faster than expected at a 4.3 percent rate,” Fratantoni said. “Solid consumer spending growth of 3.5 percent and an improvement in the trade balance were the primary contributors to this growth.”
The news wasn’t as good in the structures investment category as both residential and non-residential investments were down in the third quarter.
“Both residential investment and non-residential structures investment decreased during the quarter, as builders and developers pulled back in the face of elevated inventories and vacancy rates and stagnant rents and home prices,” Fratantoni said.
Delayed data
While economists will take Tuesday's data into account, it is nearly two months old. It was initially scheduled for release on October 30, then on November 26, before finally being released near the end of December.
“The lingering effects of the government shutdown continue to impact key data, such as these, as it would have typically been the second read on Q3 GDP, but the first, ‘advance,’ estimate was cancelled due to the shutdown,” Fratantoni said.
Because of the delayed data, some of it may not accurately reflect the current state of the economy.
Sam Williamson of First American says the Fed will likely proceed cautiously in 2026, with one or two rate cuts expected despite leadership changes. Policy remains data-driven, balancing inflation and employment. Read more and share your thoughts.https://t.co/2nyZa0eFbW
— Mortgage Professional America Magazine (@MPAMagazineUS) December 16, 2025
Fortunately for the Federal Reserve, it will get a more up-to-date view of the economy when the Q4 data are released on January 22, 2026.
The central bank will announce its next rate decision on January 28. CME FedWatch puts the current chance of a rate cut in January at 13.3%. Currently, it is forecasting two rate cuts in 2026, one in April and another in September.
However, there could be further data delays in 2026 if the government fails to pass another funding bill by the end of January. If that doesn’t happen, there could be another government shutdown in February.
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