US GDP rose unexpectedly at 4.3% in Q3, thanks to consumer spending. Inflation also increased to 2.9%, above the Fed’s 2% target. This growth may prompt the Fed to hold interest rates steady and focus on taming prices. Consumer spending rose 3.5%, leading to a potential year-end stock market rally.

The strong GDP growth of 4.3% in Q3 exceeded economists’ forecasts and could shift concerns from a slowing economy to price stability. Inflation also rose to 2.9%, above the Fed’s target of 2%. Consumer spending increased by 3.5%, accounting for 70% of the economy. Bank of America and Goldman Sachs predict two rate cuts next year.

Investors may overlook the exceptional GDP number due to decreased trading activity at year-end. Despite low trading volume, the path of least resistance is higher until the end of the year. Bank of America and Goldman Sachs forecast two rate cuts next year, with potential risks of pushing long-term bond yields higher and undermining the dollar.

Read more at Yahoo Finance: Consumer Spending Surge Sets Stage for Year-End Market Rally