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The US economy grew at an annualised rate of 4.3 per cent in the third quarter, according to official data released on Tuesday that far surpassed economists’ expectations and was well ahead of previous quarters.
The rise in GDP, which was boosted by consumer spending on healthcare and computing, compared with estimates of 3.2 per cent among economists polled by Bloomberg and was the strongest reading since the third quarter of 2023.
The figure from the Bureau of Economic Analysis was also helped by increases in government defence spending and exports. Business investment slowed, while imports fell.
“The growth numbers in Q3 blew our expectations out of the water,” said Thomas Simons at Jefferies. “The bar has been set extremely high for continued growth in Q4.”
US President Donald Trump was quick to take credit for the better than expected figure. “The Trump Economic Golden Age is FULL steam ahead — ‘You haven’t seen anything yet!’” he wrote on Truth Social.
But in a sign the economic backdrop is likely to deteriorate, separate data released on Tuesday by the Conference Board showed consumer confidence in December slumped to its second-lowest level in five years.
The BEA report, which was delayed by the recent government shutdown, comes after GDP figures for the first two quarters were distorted by big trade swings.
The world’s biggest economy shrank by an annualised 0.5 per cent in the first quarter as businesses rushed to buy foreign goods ahead of the implementation of Trump’s sweeping tariffs, before growing at a 3.8 per cent rate in the second quarter as imports slid.
Imports, which have a negative effect on GDP, fell again in the third quarter, while exports remained strong. Overall net trade added 1.6 percentage points to the headline rate.
Joe Lavorgna, economic counsellor to Treasury secretary Scott Bessent, said: “Consumer spending is robust; capex is still very robust; and then you’ve got the trade numbers. Exports are up almost 9 per cent, imports are down about five.”
“What we’re seeing is basically what the president wants — strong private sector demand and an improving trade balance,” he added. “Which suggests that you may get a re-industrialisation rejuvenation sooner than people think.”
Oliver Allen at Pantheon Macroeconomics said the scale of the net trade boost to growth was “unlikely to be sustained”.
Market reactions to Tuesday’s data were mixed, skewed by thin trading volumes with many on Wall Street trading desks out of office for the holidays. Two-year Treasury yields rose as investors scaled back bets on interest rate cuts from the Federal Reserve early in 2026.
Wall Street’s blue-chip S&P 500 closed at a fresh record high, as the third-quarter GDP figures fanned a rally into the year’s end.
“These figures will put a little bit of pressure on Treasuries, but I don’t think this changes anything for the Fed,” said Andy Brenner, head of international fixed income at NatAlliance Securities, adding he expected the central bank to hold rates for the first few months of 2026.
Last week, economists were taken aback by a consumer price index report that showed a sharp slowing in inflation to 2.7 per cent in November, but analysts said the data had been distorted by the government shutdown.
Tuesday’s BEA report showed third-quarter growth received a large boost from consumer spending on healthcare services, which added 0.8 percentage points to the overall rate.
A large rise in household purchases of information-processing equipment — a category that includes many consumer electronics — was also a significant contributor.
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Government spending, led by federal defence outlays, added 0.4 points.
The slowdown in consumer spending since the period covered by the report, alongside repercussions from the shutdown, is expected to weigh on growth in the final quarter of 2025.
Data for this period has also been delayed by the shutdown and will be released next year.
Mike Reid, an economist at Royal Bank of Canada, said: “Looking ahead, we are watching for signs of slowing consumer momentum and weaker government spending in [the fourth quarter] as a result of the shutdown.”
He added he was also closely watching “the pace of inventory rebuild”, which he said would “see a bigger impact from tariffs moving forward”.
Additional reporting by Claire Jones in London
