(The Lion)–U.S. inflation data released last week painted a decidedly better-than-expected picture for consumers heading into the holiday season.

And Tuesday, the Commerce Department released a report that showed domestic GDP growth rose from 3.8% in Q2 2025 to 4.3% in Q3.

The data adds to other signs showing higher U.S. economic strength, a picture that has been blurred by the lack of fresh data from federal statistical agencies about the economy because of the recent government shutdown.

However, the strength of recent economic data may be altering moods just in time for a Merry Christmas.

Last week, the main measure of inflation, the Consumer Price Index (CPI), came in well below consensus expectations of 3.1%, to report just 2.7% inflation year-over-year, according to the Bureau of Labor Statistics survey.

The less volatile core CPI, which excludes food and energy prices, came in at 2.6%.

Harvard economist Professor Kent Rogoff, who is no fan of President Donald Trump’s economic policies, was blunt in his approval of the latest inflation numbers.

“I was surprised. It was a better number than anyone was expecting,” Rogoff told CNN about the BLS report.

“Look, inflation’s been very high,” he continued, talking about the Biden inflation spike. “I think the president will take this as good news, the investors will think interest rates will get cut more. It was positive news. There’s no other way to spin it.”

In May, Rogoff, who previously served as the chief economist at the International Monetary Fund, forecast inflation this year to be 4%.

Fox Business host of Making Money Charles Payne criticized the poor economic forecasting.

“Wall Street estimates weren’t even close,” Payne said of the inflation calls.

Wall Street and academia aren’t the only ones paying attention.

Consumers seem to be in the know as well.

The University of Michigan survey of consumers reported pessimism about inflation has declined for the fourth month in a row, to the lowest reading in 11 months.

Good news on inflation can be stacked next to reports of robust holiday spending, suggesting consumer resilience, even if doubts about the future remain.

The National Retail Federation (NRF) said holiday spending will top $1 trillion for the first time ever, growing between 3.7% to 4.2% year-over-year.

Chief Economist Mark Mathews at NRF said while consumer sentiment for the future has been hurt by the inflation outlook, it’s not slowing down consumer spending, in part because consumer fundamentals are still strong.

“As we head into the holiday season, we have a consumer that has both the means and the intent to continue to be the spark this economy needs to stay on an even keel,” Mathews said.

Much of the strength stems from spending on discretionary categories such as apparel, electronics and online purchases, with retailers benefiting from extended promotions and stronger foot traffic than anticipated, NRF said.

Market reactions were immediate: equity indexes climbed as traders dialed up expectations for future Federal Reserve rate cuts now that inflation appears to be under control.

Analysts also expressed renewed optimism for possible rate-cut discussions in early 2026 rather than further tightening.

Against this backdrop, other economic indicators have shown strength as well.

The Atlanta Fed’s GDPNow model, a real-time gauge of gross domestic product growth, currently projects 3.5% GDP growth for the fourth quarter of 2025.

If this estimate holds, it would mark the first time since the early 2000s (not including COVID-19 pandemic rebound quarters) that the U.S. economy has posted three consecutive quarters of growth above 3%, a stretch last seen during the post-recession expansion of 2003-2004.

Labor market data has drawn attention this month, too.

While headline reports noted the unemployment rate ticked up, the labor force itself continues to expand, a generally positive sign of more Americans seeking work and participating in economic activity.

Axios noted many of the participants in the labor force are new participants, which tends to bump up the unemployment number temporarily.

Axios also reported the October labor numbers were soft because the government cut 162,000 jobs through one-time buyouts executed by DOGE.

“Private payrolls have risen by an average of 75,000 a month for the last three months, which actually suggests stronger underlying job creation than implied by private-sector data sources,” said the news site.

Subdued inflation, healthy holiday sales and a growing labor force counter earlier worries that price shocks caused by tariffs, deportations or a slowdown in consumer demand would hinder growth.

Instead, many sectors appear to be advancing into the New Year at a pace signaling a healthy economy, despite a year of doom and gloom forecasts by establishment economists – who may finally be admitting they were wrong just in time for Christmas.