The U.S. economy grew at a surprisingly robust annualized pace of 4.3% in the third quarter of 2025, the Commerce Department announced Tuesday in a report that had been delayed by the government shutdown.
Driven by strong consumer spending, the growth — the highest in two years and a big jump from the 3.8% annualized rate recorded in the previous quarter — crushed expectations and indicates that the economy still has momentum despite a softening labor market and widespread concerns about tariff-driven inflation and a potential slowdown.
Consumer spending rose 3.5% on a quarterly basis, while business investment grew 2.8%. Spending on equipment was strong, up 5.4%, while defense spending grew 5.8%, helping to maintain overall government spending growth of 2.2%. Net exports played a key role, as well, contributing 1.6 percentage points to the total growth number.
Inflation also moved higher, with the personal consumption expenditures price index rising 3.4%, compared to 2.1% in the previous quarter. The core PCE index, which leaves out volatile food and fuel prices, rose 2.9%, compared to 2.6% the quarter before.
President Trump celebrated the report, saying that while most economists underestimated the growth numbers, “’TRUMP,’ and some other Geniuses, got it right.” Trump attributed the growth to “Good Government, and TARIFFS” while falsely claiming that “there is NO INFLATION!”
What the analysts are saying: Heather Long, chief economist at Navy Federal Credit Union, noted that trade played an unusually large role in the GDP report, with “artificially” high exports and low imports making GDP growth look stronger than it would have been otherwise.
Still, even without the distorting influence of the trade data, consumption was strong in the third quarter and overall growth was solid. “This [is] a ~2.5% to ~3% economy right now,” Long wrote. Ongoing growth, though, “depends a lot on Americans keeping their jobs and layoffs not picking up.”
Diane Swonk, chief economist at KPMG, highlighted the contrast between solid growth numbers and weak employment growth. “Employment rose by 160,000 jobs over the six months between April and September of this year,” she wrote in a research note. “That contrasts with employment gains of 1.5 million in the back half of 2023.”
Even without strong job growth, the economy appears to be stronger than some analysts had thought, with a solid outlook for 2026. “If the economy keeps producing at this level, then there isn’t as much need to worry about a slowing economy,” said Chris Zaccarelli, chief investment officer for Northlight Asset Management, per the Associated Press.