U.S. economy grows by 4.3% in third quarter, much more than expected, delayed report shows

[Ol Janx Spirit]

12. Okun's law--not really a law but informative--would suggest this number is not accurate, but there are caveats.

Okun's law is an empirically observed relationship between unemployment and losses in a country's production.
https://en.wikipedia.org/wiki/Okun%27s_law

This seems an obvious thing, but Okun did a good job of quantifying it.

A couple of points though:
This is Q3 data, so we should have had this back in October. This means this data is capturing what happened over the summer and not the more recent slowdown in the economy. That said, holiday spending rose 4.2% this year according to Visa--but some of that is likely driven by higher prices IMO.

Imports are slowing due to tariffs, and they are a subtraction in the calculation of GDP--so imports going down actually makes the GDP number look better even though your local toy retailer that went out of business due to tariffs might beg to differ.
https://www.reuters.com/business/us-september-trade-deficit-lowest-more-than-five-years-goods-exports-soar-2025-12-11/

"The top 10 percent of U.S. households now account for nearly half of all spending, Moody’s Analytics recently estimated, the highest share since the late 1980s. Consumer sentiment has climbed among high earners but steadily fallen for other groups."
https://web.archive.org/web/20251019114215/https://www.nytimes.com/2025/10/19/business/economic-divide-spending-inflation-jobs.html
So these numbers are likely fueled by the "K-shaped" economy. When 90% of the population is in some sort of angst about their personal economy it eventually leads to political problems that even the top 10% can't get you out of.

It is hard to imagine that the 317,000 federal employees forced to leave the government this year will continue their spending habits for very long. Private sector employment remains flat, so that means that many--if not most--of these former federal workers have not reentered the workforce. At some point soon this should show up in the economic data--possibly in the Q4 numbers if we can rely on them.

So, if unemployment continues to tick up in Q4 we will certainly expect Okun's law to show up in the data.