While the U.S. Bureau of Economic Analysis (BEA) reported a robust 4.3% annual increase in third-quarter real gross domestic product (GDP) on Tuesday, economist David Rosenberg is calling the headline number a “fugazi.”
The president of Rosenberg Research argues that underlying economic weakness is being masked by government spending and depleted savings, calculating “true” growth at a meager 0.8%.
The official BEA release shows widespread gains, with real GDP accelerating from 3.8% in the second quarter to 4.3% in the third. The increase was driven primarily by consumer spending, exports, and government spending.
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However, Rosenberg contends these figures are misleading. “If you think the CPI data was manipulated, so was today’s GDP report,” Rosenberg stated on X.
He argues that once government spending, shifting import data, and a “sharp drawdown” in the personal savings rate are stripped away, the economy is barely expanding. He specifically points to “flat personal disposable income growth” as a critical red flag contradicting the apparent consumption boom.
If you think the CPI data was manipulated, so was today’s GDP report. Strip out government, sliding imports and the sharp drawdown in the personal savings rate in support of consumption (in the face of flat personal disposable income growth), and guess what? Real GDP growth was…
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The report has sparked fierce debate among analysts interpreting the same data through vastly different lenses. While Rosenberg sees a hollow economy propped up by unsustainable spending, Gordon Johnson of GLJ Research sees a terrifying nominal boom.
Johnson highlights that nominal GDP (growth before adjusting for inflation) surged 8.2%, accompanied by a GDP price index reading of 3.8%—far hotter than the Fed’s target.
“Nominal growth in the U.S. is >8%… yet 10yr yields are AT JUST 4.17%?” Johnson questioned, arguing that the Federal Reserve’s current easing cycle is “encouraging EVEN MORE inflation” in an economy that is overheating, not cooling.
So… nominal growth in the U.S. is >8%, the GDP price index just came in at 3.8% (WAY above ests.), yet 10yr yields are at JUST 4.17%? History suggests w/ nominal growth at >8%, 10yr yields should be WAY higher. And, yet, the Fed is doing QE & cutting rates, encouraging EVEN… pic.twitter.com/s38RNWm81Z
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The official data support elements of both bearish views. The BEA confirmed that imports, which subtract from GDP, decreased, artificially boosting the headline number.
Meanwhile, the price index for gross domestic purchases accelerated to 3.4%, up from 2.0% in the previous quarter, lending credence to Johnson’s inflation fears.
As markets digest the report, investors are left with a stark choice: believe the headline strength, Rosenberg’s “fugazi” weakness, or Johnson’s inflationary fire.
After a series of federal and economic headwinds, the stock market remained resilient in 2025, with all three major U.S. benchmark indices advancing over the course of the year.
The S&P 500 was 17.74% higher, whereas the Nasdaq Composite and Dow Jones gained 22.20% and 14.27%, respectively, on a year-to-date basis.
The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, closed higher on Tuesday. The SPY was up 0.46% at $687.96, while the QQQ advanced 0.47% to $622.11, according to Benzinga Pro data.
The futures of Dow Jones, S&P 500, and Nasdaq 100 indices were lower on Wednesday.
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This article GDP ‘Nowhere Near’ 4.3%: Rosenberg Dismisses Q3 Report As ‘Fugazi,’ Pegs Real Growth At 0.8% originally appeared on Benzinga.com
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