The U.S. economy delivered its strongest performance in nearly two years during the third quarter of 2025, propelled by resilient consumer spending and a boost from trade, according to a long-delayed government report released Tuesday.
The Commerce Department reported that gross domestic product—the broadest measure of economic activity—increased at a seasonally and inflation-adjusted annual rate of 4.3% from July through September. The result marked the fastest expansion since late 2023 and significantly outpaced economists’ expectations of 3.2%, based on a Wall Street Journal survey. It also represented an acceleration from the 3.8% growth recorded in the second quarter, according to The Wall Street Journal.
Household spending remained the central engine of growth. Consumer expenditures rose at a 3.5% annualized rate, up from 2.5% in the prior quarter, with particularly strong demand for healthcare services and recreational vehicles. A core measure of private-sector demand—excluding government spending, inventories, and trade—also edged higher, signaling continued momentum beneath the headline figures.
Trade provided a sizable lift, adding 1.59 percentage points to overall growth as exports surged while imports declined further. Because imports are subtracted in GDP calculations, falling import volumes mechanically boost the growth rate.
Business investment, however, showed signs of cooling. It advanced at a 2.8% rate, down from a robust 7.3% increase in the second quarter. Spending on equipment and intellectual property products, including investments linked to artificial intelligence, rose 5.4%, slower than in the prior period.
Since President Trump’s return to office, the economy has grown at an average annual rate of 2.5%, roughly in line with the 2.4% average recorded in 2024 under the Biden administration. That comparison includes an early contraction in the first quarter of 2025, attributed to companies accelerating imports ahead of new tariffs.
Inflation pressures firmed alongside the stronger growth. Core prices, excluding food and energy, climbed at a 2.9% annualized rate in the third quarter, up from 2.6% previously and still above the Federal Reserve’s 2% target.
The report, which serves as the government’s first official estimate of third-quarter activity, arrived nearly two months late due to a federal government shutdown that disrupted data collection across multiple agencies, including the Commerce Department.
Consumer price inflation stood at 2.7% year over year in November, slightly below forecasts, though economists warned that shutdown-related data disruptions may have distorted the reading. At the same time, businesses face uncertainty over how much of the cost of new tariffs they can pass along to consumers, complicating efforts to gauge the full inflationary impact of recent policy changes, but overall it looks like Americans are getting good economic news for Christmas.
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