The U.S. economy grew at its fastest rate in two years in the third quarter of 2025, buoyed by a strong rebound in consumer spending that more than offset weaker investment growth.
According to revised figures from the US Bureau of Economic Analysis, gross domestic product grew at an annual rate of 4.3 percent between July and September. The updated estimate was raised from the original 3.8 percent and was well above economists’ expectations of around 3.3 percent growth. It is the strongest quarterly performance since the third quarter of 2023 and an acceleration from the previous quarter’s 3.8 percent.
The numbers underscore the continued resilience of the world’s largest economy, which significantly outperformed its G7 competitors last year. In comparison, the UK recorded annual growth of just 0.4 percent over the same period, while the Eurozone grew at around 1.2 percent.
Household spending was the main driver of growth, contributing more than two percentage points to total GDP growth. Americans continued to spend strongly on services and consumer goods, helping to offset headwinds in other areas of the economy. Government spending also provided a boost, while exports made a positive contribution as imports fell following the imposition of tariffs earlier this year.
However, investments had a slight slowing effect on growth. While spending on artificial intelligence infrastructure remains high, the pace of expansion has slowed compared to previous quarters, reducing its overall contribution to GDP.
In a post on Truth Social, President Donald Trump hailed the numbers as evidence that the economy was thriving, writing that “the Trump golden economic age is full steam ahead.”
The strong growth data is likely to complicate the outlook for US monetary policy. The Federal Reserve has cut interest rates three times in 2025, but the latest GDP numbers could make a case for keeping borrowing costs low next year as policymakers weigh persistent inflation against signs of a slowdown in the labor market.
Inflationary pressures remain a concern. The personal consumption expenditures index, the Fed’s preferred inflation gauge, rose to 2.8 percent in the third quarter from 2.1 percent previously. Core inflation, which excludes volatile food and energy prices, rose to 2.9 percent, further above the central bank’s 2 percent target.
The financial markets reacted cautiously to the data. U.S. stocks opened slightly higher, with major indexes gaining less than 1 percent. Treasury bond prices fell, pushing up the two-year Treasury yield slightly as investors scaled back expectations of further interest rate cuts in 2026.
The dollar weakened against major currencies, falling to a three-month low, while gold continued its rally to hit a new record as investors sought alternatives to U.S. assets.
Economists expect momentum to slow in the final quarter of the year after a prolonged government shutdown weighed on activity and consumer confidence surveys already show sentiment at its weakest level in five years. Nevertheless, the third quarter figures confirm that the US economy started 2025 with considerable underlying strength.
