US GDP jumped 4.3% in Q3 as consumer spending grew the fastest in two years
The US economy grew at its fastest rate in two years in the third quarter of 2025, boosted by a strong rebound in consumer spending that more than offset weak investment growth.
Gross domestic product grew at an annual rate of 4.3 percent between July and September, according to updated figures from the US Bureau of Economic Analysis. The revised estimate was removed from the initial reading of 3.8 percent and was above economists’ expectations of 3.3 percent growth. It marks the strongest quarterly performance since the third quarter of 2023 and accelerated growth from the 3.8 percent recorded in the previous quarter.
These figures underline the continued recovery of the world’s largest economy, which has outperformed its G7 peers in the past year. By comparison, the UK posted annual growth of just 0.4 percent over the same period, while the eurozone expanded by around 1.2 percent.
Household spending was the main growth factor, contributing more than two percentage points to the increase in overall GDP. Americans continued to spend more on services and discretionary items, helping offset headwinds elsewhere in the economy. Government spending also strengthened, while exports took a positive hit as imports eased following the introduction of tariffs earlier in the year.
Investments, however, were a minor drag on growth. Although spending on intelligence infrastructure remains high, the pace of expansion has slowed compared to previous areas, reducing its contribution to GDP.
Posting on Truth Social, President Donald Trump hailed these figures as evidence that the economy is improving, writing that “the Trump Economic Golden Age is FULL steam ahead”.
Strong growth data is likely to complicate the outlook for US monetary policy. The Federal Reserve has cut interest rates three times by 2025, but the latest GDP figures could bolster the case for keeping borrowing costs on hold next year as policymakers weigh continued inflation against signs of a cooling 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 earlier. Inflation, which strips out volatile food and energy prices, rose to 2.9 percent, ahead of the central bank’s two percent target.
Financial markets reacted cautiously to the data. US stocks opened modestly higher, with major indexes up less than 1 percent. Government bond prices fell, pushing two-year Treasury yields up slightly as investors cut expectations for a rate cut in 2026.
The dollar weakened against major currencies, falling to a three-month low, while gold continued its rally, hitting a new record as investors sought alternatives to US commodities.
Economists expect momentum to ease in the final quarter of the year after a prolonged government shutdown weighed heavily on employment, as consumer confidence surveys are already showing sentiment at its weakest level in five years. However, the third quarter figures confirm that the US economy entered the end of 2025 with significant underlying strength.
