Siegel called it a “real shock” that the Atlanta Fed dramatically lifted its Q4 GDP estimate to 5.4% from under 3%.
- The economist outlined that several factors are contributing to the U.S. economy’s resilience.
- This includes a shift in immigration policy under the Trump administration, which has reduced the influx of less-productive labor, thereby lifting average output per worker.
- Siegel added that firms are focusing on investing in technology and process efficiency amid a labor shortage.
Jeremy Siegel, professor emeritus of finance at the University of Pennsylvania’s Wharton School of Business, on Tuesday stated that the U.S. economy’s better-than-expected performance in the third quarter (Q3) is a sign of more efficient growth.
“The macro message is clear. The U.S. economy is growing faster than expected, productivity is accelerating, and inflation pressures remain contained,” he said. “This is not a late-cycle stagnation story; it is a recalibration toward more efficient growth.”
Siegel also highlighted the fact that the Federal Reserve Bank of Atlanta revised its fourth-quarter (Q4) GDP estimate to 5.4%, up sharply from under 3%. He characterized it as a “real shock.”
‘Exceptionally Strong Real Growth’
The economist also touched upon the reasons behind the U.S. economy delivering a strong performance for the second straight quarter. Data from the Commerce Department showed that the U.S. GDP grew 3.8% in Q2, compared to Wall Street estimates of 2.5%.
Siegel noted that the Atlanta Fed’s GDP estimate for Q4 implies “exceptionally strong real growth” even as employment gains remain modest, and the negative impact of the U.S. government shutdown percolates through the economy.
“That arithmetic points to a powerful productivity surge, one of the strongest we’ve seen outside of post-recession rebounds,” Siegel said.
What’s Boosting The U.S. Economy?
The economist outlined that several factors are contributing to the U.S. economy’s resilience.
This includes a shift in immigration policy under the Trump administration, which has reduced the influx of less-productive labor, thereby lifting average output per worker. He added that firms are focusing on investing in technology and process efficiency amid a labor shortage.
“Whether or not AI is fully showing up in the data yet, the productivity numbers are undeniable, and they are exactly what the economy needs to grow without reigniting inflation. This backdrop is extraordinarily supportive of profit margins,” he added.
Advice For Investors
Siegel maintained that he remains constructive on equities, while adapting a selective approach. He cautioned that AI is competitive and that margins are unlikely to expand indefinitely.
The economist noted that he would not be surprised if major tech names deliver modest gains while small caps and non-tech cyclical stocks deliver double-digit returns this year.
“For investors, this backdrop argues for staying overweight equities, broadening exposure beyond the most crowded names, and preparing for a 2026 environment where earnings growth, not multiple expansion, does most of the work,” he noted.
Meanwhile, U.S. equities declined in Tuesday’s pre-market trade. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was down by 0.15%, the Invesco QQQ Trust ETF (QQQ) fell 0.24%, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) declined 0.13%. Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘neutral’ territory.
The iShares 7-10 Year Treasury Bond ETF (IEF) edged up by 0.01% at the time of writing.
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