3.8% Growth and a Tale of Two Brothers

For the week ended 9/27/25.

Good morning and welcome to Monday. Take a sip of your brew and let’s dive in.

First off, the third revision of second-quarter GDP landed last Thursday, and it came in hot, an annual rate of 3.8%, the strongest quarterly growth in nearly two years. The engine? Business investment, particularly in software and the hardware behind AI infrastructure. Spending on intellectual property – think research and development – jumped at a 15% annual clip, the fastest since 1999. For the seasoned readers here, you’ll recall what happened shortly thereafter. (Hint: it wasn’t just Prince singing about 1999.)

Now, a little perspective. The initial Q2 GDP estimate was 3.0%, the second revision bumped to 3.3%, and now we’re at 3.8%. That’s a 27% leap from first to final. Call me a nerd, but that’s a big swing, suggesting the economy isn’t just jogging but running a 5K with a tailwind.

Markets, however, mostly shrugged. Last week saw stocks and bonds each slip about 30 bps, global real estate fell 40 bps, and foreign shares led the slide at -70 bps. Commodities were the lone bright spot, up 2.1%, as tariff chatter stoked inflation worries.

Looking ahead, keep an eye on Tuesday’s consumer confidence release and Friday’s unemployment report, with expectations holding steady at 4.3%.

And because no MMM is complete without a good story: wasteful government spending isn’t exactly a new phenomenon. In the early 1900s, the Smithsonian Institution and the U.S. War Department poured $50,000 (a fortune at the time) into a failed attempt at manned flight. Meanwhile, two brothers from Ohio tinkering in a bicycle shop spent just $1,000 of their own money – and took off at Kitty Hawk, North Carolina. The rest, as they say, is history.

With that, enjoy your next flight – and your Monday.

Interesting data point of the week.