US economic activity for the third quarter is expected to accelerate, according to the Atlanta Fed’s GDPNow model. Q3 output is expected to rise 4.2% in the July-through-September quarter, modestly above Q2’s strong 3.8% increase. The official report on Q3 should have been published by now, but has been delayed due to the government shutdown.

Nvidia (NVDA) reported better-than-expected earnings and revenue for the third quarter. “There’s been a lot of talk about an AI bubble,” Nvidia CEO Jensen Huang told investors on an earnings call. “From our vantage point, we see something very different.”

Fed minutes highlight divisions at central bank on the outlook for rate cuts. “Several participants assessed that a further lowering of the target range for the federal funds rate could well be appropriate in December if the economy evolved about as they expected over the coming intermeeting period,” the minutes said. “Many participants suggested that, under their economic outlooks, it would likely be appropriate to keep the target range unchanged for the rest of the year.”

The US trade deficit narrowed sharply in August due to tariffs. “August’s smaller trade deficit will be a tailwind for third quarter real GDP, since it means that more U.S. expenditures were directed toward domestically-produced goods and services rather than foreign ones,” Bill Adams, chief economist at Comerica Bank, wrote in a commentary. “While this release is quite dated because of the government shutdown, it contributes to evidence that the economy was growing briskly in the third quarter.’’

The US Labor Department cancels the October payrolls report. Citing the government shutdown, the agency said officials were prevented from collecting the key data needed for last month.

A “recession-sensitive sector index” — a composite of the industries that have historically contributed the most to payroll declines during recent business-cycle recessions — is flashing a warning for the US economic outlook, writes Bill Hester, senior research analyst at Hussman Strategic Advisors. “In August, the six-month change in this index went negative for the first time since the 2020 recession,” he reports. “This calculation is worth watching closely: historically, this measure has never turned negative without the economy already being in, or just about to enter, a recession.”

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