The US economy surged over the summer, the commerce department announced on Tuesday in one of the final snapshots of the nation’s finances to be released in 2025.
Gross domestic product (GDP) – a broad measure of the value of goods and services – rose at an annualized rate of 4.3% over the third quarter, far higher than expected and its fastest rate in two years.
The surprisingly strong growth “reflected increases in consumer spending, exports, and government spending that were partly offset by a decrease in investment”, according to the Bureau of Economic Analysis.
Economists had been expecting the growth rate to slow to 3.2% from an annualized rate of 3.8% in the second quarter.
The report comes as polls show Americans have soured on Donald Trump’s handling of the economy and his tariffs. The supreme court is currently weighing legal challenges to those levies.
“The TARIFFS are responsible for the GREAT USA Economic Numbers JUST ANNOUNCED…AND THEY WILL ONLY GET BETTER! Also, NO INFLATION & GREAT NATIONAL SECURITY. Pray for the US Supreme Court!!! President DJT,” Trump wrote on Truth Social.
The summer surge was offset by more bad news on consumer confidence. The Conference Board’s closely watched gauge of consumer sentiment fell in December for the fifth month in a row, the longest consecutive fall since 2008.
The GDP figures will further complicate the decision-making of the Federal Reserve. The Fed announced its third interest rate cut of the year earlier this month amid signs of a weakening jobs market but is divided about how it should proceed.
The Fed’s dual mandate is to maintain price stability while maximising employment. Inflation remains stubbornly above its 2% yearly target – supporting the argument that rates should stay high to bring down prices – but the cracks in the job market suggest lower rates might help keep unemployment from rising.
The Fed’s decisions is also clouded by a lack of data. As has been the case with other key economic reports, the latest GDP figures had been held back by the government shutdown, which lasted from 1 October to 12 November and furloughed government workers, including those responsible for collecting economic data.
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The US economy has demonstrated resilience in a year of extraordinary challenges. Trump announced sweeping tariffs in April on the US’s major trading partners and while he has watered down or rolled back many of the levies, the uncertainty they have caused has rattled businesses and consumers.
The US economy contracted in the first quarter of 2025 as businesses tried to get ahead of Trump’s threatened tariffs with an unprecedented surge in imports. But GDP growth soon recovered, spurred on by massive investment in artificial intelligence and robust consumer spending.
In a note to investors, Paul Ashworth, chief North America economist at Capital Economics, wrote: “The economy maintains considerable momentum. That said, the shutdown could trigger a slowdown in the fourth quarter to nearer 2% annualised.”
