Evelyn Reynolds

Gross domestic product increased at a 2.8% annualized rate in the third quarter, below the 3.1% estimate and the 3.0% reading Q2.
Consumer spending and federal government outlays were two of the biggest contributors to GDP growth.
The release comes with the Federal Reserve poised to lower interest rates further despite the seemingly strong economy and inflation that remains above target.

The U.S. economy posted another solid though slightly disappointing period of growth in the third quarter, propelled higher by strong consumer spending that has defied expectations for a slowdown.
Gross domestic product, a measure of all the goods and services produced during the three-month period from July through September, increased at a 2.8% annualized rate, according to a Commerce Department report Wednesday that is adjusted for inflation and seasonality.

Economists surveyed by Dow Jones had been looking for an increase of 3.1%. The economy accelerated at a 3% pace in the second quarter. Wednesday’s reading is the first of three the department will issue.
The report confirms that the U.S. expansion has continued despite elevated interest rates and long-standing worries that the burst of fiscal and monetary stimulus that carried the economy through the Covid crisis wouldn’t be enough to sustain growth.
However, resilient consumer spending, which accounts for about two-thirds of all activity, has helped keep the economy moving, as has a relentless wave of government spending that pushed the budget deficit to more than $1.8 trillion in fiscal 2024.

A ship carries shipping containers through Upper Bay in New York, U.S., September 30, 2024.
Caitlin Ochs | Reuters

Personal consumption expenditures, the proxy for consumer activity, increased 3.7% for the quarter, the strongest performance since Q1 of 2023. Another major factor the department cited for growth was federal government spending, which exploded higher by 9.7%, pushed by a 14.9% surge in defense outlays.
However, an 11.2% jump in imports, which subtract from GDP, held back the growth number and offset an 8.9% gain in exports.

Markets showed little reaction to the data, as stock market futures pointed to a mixed opening. Treasury yields also were mixed. Earlier in the morning, payrolls processing firm ADP reported that private job growth surged by 233,000 in October, well above expectations.
The GDP release comes with the Federal Reserve poised to lower interest rates further despite the seemingly strong economy and inflation that remains above target, though far from its peak in mid-2022.
Markets widely expect the Fed to cut another quarter percentage point off its benchmark short-term borrowing rate when policymakers conclude their two-day meeting on Nov. 7.
There was good news on the inflation front: The personal consumption expenditures price index, the Fed’s preferred inflation gauge, rose 1.5% for the quarter, below the central bank’s 2% target and sharply down from the 2.5% increase in Q2. However, excluding food and energy, core PCE was still up 2.2%. Fed officials generally consider core inflation as a better measure of longer-term trends.
Consumers have been using savings and credit to help fuel their purchases. The personal savings rate decelerated in the third quarter to 4.8%, down from a 5.2% level that had been revised up sharply.
Along with the expectations for more Fed easing, the economic news shares a backdrop with the contentious U.S. presidential race, which most polls show in a dead heat between Democrat Kamala Harris and Republican Donald Trump.
While Harris has boasted of the ongoing strength in economic activity — GDP has now grown for 10 consecutive quarters — Trump has countered by citing inflation that peaked more than two years ago at its highest level since the early 1980s.
The pace of price increases has slowed considerably since then, though the PCE index has risen nearly 17% while Harris has served as vice president.

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Passers-by walk in the pedestrian zone of the Bavarian capital.
Peter Kneffel | Picture Alliance | Getty Images

Germany’s inflation surged to 2.4% in October, back above the European Central Bank’s 2% target, even as the country narrowly avoided a technical recession in the third quarter.
The preliminary print, announced by German statistics office Destatis, is harmonized across the euro area for comparability.

Analysts polled by Reuters had been expecting harmonized inflation to come in at 2.1% in October.
Harmonized inflation had dropped to 1.8% in September, after coming in at the European Central Bank’s 2% target in August.
The data comes after Destatis earlier on Wednesday posted a preliminary reading of Germany’s gross domestic product, which grew 0.2% in the third quarter compared to the previous three months.
The increase surprised analysts polled by Reuters who had anticipated a 0.1% decline, allowing Germany to narrowly avoid a technical recession — which is marked by two consecutive quarters of contraction.
Destatis also revised down the second-quarter GDP figures to a 0.3% contraction, from a previously reported 0.1% dip. More

ADP said private companies hired 233,000 new workers in the month, better than the upwardly revised 159,000 in September and far ahead of the Dow Jones estimate for 113,000.
It was the best month for job creation since July 2023.
The numbers counter expectations for a slowdown in October on the heels of two brutal hurricanes and strikes at Boeing and ports on the Eastern seaboard.

Private-job creation burst to its highest level in more than a year during October, despite a devastating storm season in the Southeast and major labor disruptions, ADP reported Wednesday.
The payrolls processing firm said companies hired 233,000 new workers in the month, better than the upwardly revised 159,000 in September and far ahead of the Dow Jones estimate for 113,000. ADP said it was the best month for job creation since July 2023.

“Even amid hurricane recovery, job growth was strong in October,” ADP chief economist Nela Richardson said. “As we round out the year, hiring in the U.S. is proving to be robust and broadly resilient.”
The numbers counter expectations for a slowdown in October on the heels of two brutal hurricanes — Helene and Milton — that ravaged the Southeast, with Florida and North Carolina getting slammed in particular.
On top of that, labor disruptions with port workers and Boeing were expecting to hit payrolls as well, with some economists suggesting that October would be an outlier report that Federal Reserve officials would largely dismiss when meeting next week.
However, the ADP report indicates that the labor market has held up. In addition to hiring rising, wages grew 4.6% from a year ago.
Moreover, gains were widespread. Leading sectors included education and health services (53,000), trade, transportation and utilities (51,000), construction and leisure and hospitality, which added 37,000 apiece, and professional and business services, which contributed 31,000.

Manufacturing was the only sector to report losses, down 19,000 on the month, as the Boeing strike since Sept. 13 has sidelined 33,000 of the company’s workers.
Job creation was strongly concentrated in companies with 500 or more employees, which added 140,000 of the total. Businesses with fewer than 50 workers were little changed, contributing just 4,000 of the total.
The ADP report traditionally tees up the more closely watched nonfarm payrolls count from the Bureau of Labor Services. That report, which comes Friday, is projected to show growth of just 100,000 and an unemployment rate holding steady at 4.1%.
However, the ADP and BLS reports can differ substantially, with the latter including government workers. The BLS report showed private job gains of 223,000 in September and 254,000 total payrolls growth. More

The euro area economy grew 0.4% in the third quarter, ahead of expectations for a 0.2% expansion.
Spain and Ireland recorded the strongest growth rates, while Europe’s largest economy, Germany, avoided a recession.
The readings come with the European Central Bank expected to cut interest rates four times this year.

People walk down the iconic Alcalá street on a very hot afternoon in Madrid, Spain.
Miguel Pereira | Getty Images News | Getty Images

The euro zone economy grew 0.4% in the third quarter, flash figures published by the European Union’s statistics agency showed Wednesday.
Economists polled by Reuters had expected growth of 0.2%. following the bloc’s 0.3% expansion in the second quarter.

Spain saw one of the highest growth rates, increasing 0.8% on the previous quarter, as Ireland — which generally records volatile figures due to the high proportion of international corporations stationed there — rose 2%.

The euro zone’s biggest economy, Germany, recorded a surprise growth of 0.2% in the third quarter. That allowed Europe’s largest economy to avoid the recession that had been forecast by some economists, as it struggles with a downturn in its key manufacturing sector.
“Although a technical recession was avoided, the German economy remains barely larger than it was at the start of the pandemic,” analysts at ING said in a Wednesday note, calling the nation a “magnet for negative macro news.”
Analysts say euro zone business activity and consumer confidence should cautiously pick up in the coming months, amid lower interest rates and cooling inflation.
The European Central Bank cut rates for the third time this year at its October meeting, after headline inflation came in at 1.7% in September, according to a final reading. The ECB cited persistent signs of weak activity in the euro area as a key factor in the central bank’s decision to enact an October cut.

Markets have fully priced another 25-basis-point cut from the ECB in its last meeting of the year in December. The ECB’s key rate, the deposit facility, is currently at 3.25%.

ECB President Christine Lagarde said during her October press conference that the central bank’s Governing Council had only debated a 25-basis-point cut.
Nonetheless, the possibility that the central bank could opt for a larger half-percentage-point reduction — as the U.S. Federal Reserve did in September — has been increasingly discussed over the last month. That has come as some ECB policymakers have acknowledged they may soon have to grapple with the ECB’s pre-Covid-19 issue of inflation that is persistently below the institution’s 2% target.
Franziska Palmas, senior Europe economist at Capital Economics, said stronger-than-expected growth would not deter the ECB from a December rate cut and forecast a reduction of 50 basis points.
Palmas said euro zone GDP growth would slow in the fourth quarter, with Germany still underperforming in manufacturing and with Italy struggling with the end of construction industry tax incentives, while inflation would undershoot the ECB’s forecasts for the three-month period.
However, Kamil Kovar, senior economist at Moody’s Analytics, said the latest GDP figures would be followed by an uptick in headline inflation which would “shut down any talk about a jumbo sized cut.”
Euro zone inflation figures for October are due on Thursday.
“The report puts to rest any questions of whether the euro zone is currently in recession — it is not, and such worries were always overblown,” Kovar said, calling growth “splendid in Spain and solid in France,” due in part to the summer Olympics. More

Human resources and technology concept for AI augmenting team work.
Leowolfert | Istock | Getty Images

The rise of artificial intelligence (AI) has been stunning in both its speed and impact. According to data from Goldman Sachs, investment in AI is expected to reach $100 billion in the U.S. and $200 billion globally by next year. Last year, in private equity alone, generative AI (GenAI) investments reached $2.18 billion – double from the year before.
Yet, while we often hear about the boundless promise of AI – as we should – we also need to pay more attention to the careers, lives and communities it will disrupt, including those who have so far been left out. For example, according to a recent McKinsey study, Black Americans are 10% more likely to be working jobs slated for AI automation. In addition, the same study anticipates that AI will disrupt 4.5 million jobs for Black workers. This disruption has the potential to impact billions of dollars in Black economic potential and growth. If current trends hold, the new wealth created by GenAI alone will increase the racial wealth gap by $43 billion annually, according to McKinsey.

We have already seen firsthand how the rapid adoption of technology can exacerbate gaps and create new divides. One only needs to look at the creation and adoption of computers and the internet. In 1987, economist Robert Solow famously claimed that “you can see the computer age everywhere but in the productivity statistics.” Today, we almost take for granted how much productivity the digital age has brought. But, that digital age has also created a digital divide, which exacerbates racial economic gaps. And, one of the legacies of failing to address this digital divide and ensure broadband access to Black and other communities without access to resources and opportunities has been limited engagement with these tools.

How to prevent another wealth gap

As we stand at the beginning of this next revolution in AI and its early waves of value creation, our urgent task is to prevent another gap. We can do that by empowering all people to take part and be leaders in this evolving field, allowing our economy to reap greater benefits. That begins with infrastructure that supports AI enablement for all, including education on AI tools, access to the internet and power to compute.
One model for this is the work being done by Student Freedom Initiative (SFI). As a first step, we must commit to eliminating the existing digital broadband divide. SFI has been working hard to close the digital divide in Black communities, including Historically Black Colleges and Universities (HBCUs), 82% of which reside in broadband deserts. This is a critical gap that must be closed to provide the next generation of diverse leaders with the resources, education and technical access needed to master this evolving tech.
We must also double our efforts to provide education around these tools. A combination of critical thinking and technical skills is increasingly becoming a prerequisite for effectively interacting with GenAI. Our education system, particularly secondary and higher education institutions, must play a key role in equipping students with these essential skills.
In partnership with Stats Perform, a global leader in AI solutions for the sports industry and a portfolio company of my global investment firm, Vista Equity Partners, SFI launched an “AI in Basketball” course at Morehouse College last year. This course provided hands-on instruction in AI-use cases, which helped prepare those students to be leaders in this field. It also offered students internship opportunities to use what they learned in a real-world setting, allowing them to build experience and competitive resumes for AI careers. Soon, we will be expanding these courses to other HBCUs, creating on-ramps to this growing industry. 

Another notable example of this is the work being done at internXL, which offers opportunities like free training and certifications in artificial intelligence, data science, and machine learning, including access to over 500 AI training courses. The internXL initiative also connects highly-qualified HBCU students with AI experts and employers for internships, enabling them to gain practical experience in the field. And internships are critical – studies show that an internship at a hiring organization, or in the same field, are among the highest differentiators used in choosing between qualified candidates. This work is bridging access gaps and ensuring that underrepresented talent thrives in the rapidly growing and in-demand field of AI.
Finally, we must also ensure widespread access to compute, or processing power, to run these new tools and their applications. If we use the example of smartphones, compute was made possible thanks to telecommunication organizations updating their infrastructure to handle 4G, 5G and LTE – all of which have been underinvested in across Black communities. If we want to fully harness the potential impact of AI on our economy, all communities need to have access to these tools and the infrastructure that underpins the technology. This includes computing power, requisite energy sources, and large language models and other machine learning and reasoning tools.

Economic toll

We know that the racial wealth gap will cost the U.S. economy $1 trillion to $1.5 trillion between 2019 and 2028. Imagine what it would mean for the economy if we took steps to prevent AI from becoming a new economic wedge, and it, instead, became a prolific source of generational wealth. What if we were able to ensure access to these tools for communities around the globe? So long as we take appropriate steps to prevent these tools from mimicking and reinforcing racial biases, the innovation and economic growth this would spur has the potential to close many gaps, generating prosperity for all.
With AI’s current trajectory, there will be three distinct waves of opportunity through which value will be captured. We are already seeing the first wave of value creation benefiting hardware vendors. The second wave will go to super scalers like Microsoft, Google, Oracle and other large companies that have the ability to broadly offer connectivity to compute. The third wave will benefit enterprise software vendors who provide AI and GenAI solution sets on top of their existing products. These are three distinct verticals where we must focus our equity efforts to impact the long-term growth of AI and GenAI.
The good news is that, unlike the digital revolution, we have the luxury of foresight. As AI evolves and established companies and new start-ups scale products, develop features and capture value at each stage, we must commit ourselves to ensuring that everyone has access to the incredible benefits of AI. If we fall short, we will not be equipped, nor able, to fully harness and unlock its potential. As we stand at these crossroads, we must think expansively and act decisively to ensure we build the infrastructure to support AI and GenAI enablement.
Robert F. Smith is the founder, chairman and CEO of Vista Equity Partners. He serves as chairman of Student Freedom Initiative (SFI) and Carnegie Hall, founding director and president of the Fund II Foundation and co-lead of Southern Communities Initiative (SCI). In 2019, Smith eliminated the student debt of approximately 400 Morehouse College graduates and was named one of TIME 100’s Most Influential People in 2020. More

The Conference Board’s consumer confidence index for October rose more than 11% to a reading of 138, its biggest single-month acceleration since March 2021.
Job openings slid to 7.44 million in September, down more than 400,000 from the previous month’s downwardly revised level and the lowest since January 2021.

Consumers grew more optimistic about the U.S. economy heading into the contentious presidential election even as job openings hit multi-year lows, according to separate reports released Tuesday.
The Conference Board’s consumer confidence index for October rose more than 11% to a reading of 138, its biggest one-month acceleration since March 2021. Along with that, the board’s expectations index of future conditions jumped nearly 8%, to a reading of 89.1 that is well clear of the sub-80 level that indicates a recession.

Economists surveyed by Dow Jones had been looking for a headline number of 99.5.
“Consumers’ assessments of current business conditions turned positive,” said Dana Peterson, the board’s chief economist. “Views on the current availability of jobs rebounded after several months of weakness, potentially reflecting better labor market data.”
That sentiment was seemingly at odds with a Bureau of Labor Statistics report showing that job openings slid to 7.44 million in September, off more than 400,000 from the previous month’s downwardly revised level and the lowest since January 2021. That number was also below a Wall Street forecast of 8.0 million.
The drop in openings took the ratio of job vacancies to available workers below 1.1 to 1. In mid-2022, the number was greater than 2 to 1.
Though the openings level moved lower, hires rose 123,000 on the month. Separations were little changed, while quits fell by 107,000.

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