Buckle up! U.S. GDP data set to "rock the market" tonight

In the third quarter of this year, the U.S. economy seems unstoppable, dodging another "bullet."According to market forecasts, data to be released by the U.S. Department of Commerce on Wednesday is expected to show that the seasonally adjusted and inflation-adjusted Gross Domestic Product (GDP) grew at a strong annualized rate of 3% in the third quarter, unchanged from the previous value. If this expectation comes true, it will mark the 10th consecutive quarter of economic expansion in the U.S.At the same time, the market also expects the report to show that the core PCE price index in the third quarter will slow significantly from 2.8% to 2.1%, close to the Fed's 2% inflation target. The Fed uses the PCE price index included in GDP estimates as its main inflation gauge.Therefore, the report should indicate a robust U.S. economy, easing inflation, at least somewhat compared to a year ago. Oliver Allen, senior U.S. economist at Pantheon Macroeconomics, wrote in the report, "The economic slowdown that we and many others have been expecting clearly has not materialized."But is everything really fine with the U.S. economy? Perhaps not. Allen added, " The recent strong momentum in economic growth seems increasingly unsustainable."In what may be the most unpopular economic recovery in history, concerns persist about whether the U.S. can sustain growth relying on continued consumer spending amid escalating credit concerns and apparent slowing pace of hiring. Most importantly, some economists express concerns that inflation may heat up again next year depending on the election results.Allen believes that the period from July to September this year will be the last significant growth in U.S. GDP data. While he doesn't expect an economic collapse, he foresees growth slowing to a negligible 1.5% by 2025. Allen wrote, "Deteriorating growth prospects will trigger further pronounced loss of momentum in the labor market, pushing the unemployment rate to rise faster than the Fed expects. Therefore, we expect the Fed to ease monetary policy faster and more aggressively than most investors and commentators currently anticipate."Another factor driving Fed policy rate cuts is inflation, with the core PCE price index likely getting closer to the Fed's target in the second quarter.In fact, Citigroup expects U.S. GDP growth to fall below expectations at 2.6%, but anticipates the inflation index for the quarter to reach the 2% target, a figure that may help solidify Fed officials' decision to cut rates by only 25 basis points next week. Citigroup economist Alice Zheng wrote:"Factors driving the decline in inflation come not only from falling commodity prices but also from easing service inflation. Overall, another above-trend economic growth and benign inflation data will be welcomed by the Fed."