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Newsflash: US economic growth accelerated in the third quarter of this year, to the fastest rate in two years.<\/strong><\/p>\n US real gross domestic product (GDP) increased at an annualised rate of 4.3% in the July-September period, the US Bureau of Economic Analysis reports, up from 3.8% in April-June.<\/p>\n That beats Wall Street forecasts that growth would slow to 3.3%, and is the fastest growth recorded for the US economy since the third quarter of 2023.<\/p>\n <\/span>A chart showing US economic growth<\/span> Photograph: BEA<\/p>\n Annualised growth of 4.3% is the equivalent of quarterly growth of almost 1.1%, much faster than the UK which only grew by 0.1% in Q3.<\/p>\n The increase in real GDP in the third quarter was due to increases in consumer spending, exports, and government spending that were partly offset by a decrease in investment.<\/p>\n Imports, which are a subtraction in the calculation of GDP, decreased, the BEA explains.<\/p>\n Share<\/p>\n Updated at\u00a008.44 EST<\/p>\n <\/span><\/span><\/p>\n Key events<\/p>\n <\/span>Show key events only<\/p>\n Please turn on JavaScript to use this feature<\/span><\/p>\n <\/span><\/p>\n Time to wrap up\u2026<\/p>\n The US economy surged over the summer, the commerce department announced on Tuesday in one of the final snapshots of the nation\u2019s finances to be released in 2025.<\/strong><\/p>\n Gross domestic product (GDP) \u2013 a broad measure of the value of goods and services \u2013 rose at an annualized rate of 4.3% over the third quarter, far higher than expected and its fastest rate in two years.<\/p>\n The surprisingly strong growth \u201creflected increases in consumer spending, exports, and government spending that were partly offset by a decrease in investment\u201d, according to the Bureau of Economic Analysis.<\/p>\n Economists had been expecting the growth rate to slow to 3.2% from an annualized rate of 3.8% in the second quarter.<\/p>\n Economists said strong consumption had driven growth, while there was an apparent slowdown in investment in AI datacentres.<\/p>\n However, separate data shows US consumer confidence has dropped again.<\/p>\n In other news.<\/p>\n Share<\/p>\n Ouch! US consumer confidence has dropped for the fifth month running, taking some of the shine off today\u2019s strong growth report.<\/strong><\/p>\n The Conference Board has reported that its US consumer confidence index fell to 89.1 this month, down from 92.9 in November.<\/p>\n A gauge of present conditions dropped to 116.8, the lowest since February 2021, while a measure of expectations for the next six months held steady in December.<\/p>\n Share<\/p>\n After impressive growth in July-September, the US economy is tipped to slow in the October-December quarter.<\/strong><\/p>\n James Knightley<\/strong>, chief international economist at ING<\/strong>, explains why:<\/p>\n The 4.3% annualized growth rate came in well above expectations, driven by a surge in net trade and solid consumer spending.<\/p>\n Beneath the strong headline, however, the data points to a clear K-shaped economy, with growth concentrated among higher-income households and tech-led investment,while broader consumer confidence remains under pressure.<\/p>\n Looking ahead, growth is likely to slow in 4Q as the effects of the government shutdown filter through and the temporary boost from trade fades.<\/p>\n Share<\/p>\n Wall Street has opened cautiously as traders digest today\u2019s GDP report.<\/strong><\/p>\n The Dow<\/strong> Jones<\/strong> industrial<\/strong> average<\/strong>, of 30 large US companies, has dipped by 20 points or 0.05% to 48,342 points. Amazon<\/strong> (+1.3%) are the top riser, followed by UnitedHealth<\/strong> group (+0.64%)<\/p>\n The broader S&P 500 index is up 0.13%.<\/p>\n Share<\/p>\n Some US goverment borrowing costs have risen after economic growth beat forecasts in the third quarter of the year.<\/strong><\/p>\n Today\u2019s better-than-expected GDP report may take some pressure off the US Federal Reserve to cut US interest rates as quickly as some in the markets had expected.<\/p>\n The yield (or interest rate) on two-year Treasury bonds is up 5 basis points to 3.55%, while 10-year bonds are up 3.5 basis points at 4.2%<\/p>\n Q3 GDP came in strong at an annualized +4.3%. Consumer spending (+3.5%), exports (+8.8%), and imports (-4.7%) were the big contributors. Yields up on the stronger set of data 2-3bps in response. pic.twitter.com\/333xI9vor6<\/a><\/p>\n \u2014 Liz Thomas (@LizThomasStrat) December 23, 2025<\/a><\/p>\n Share<\/p>\n Here is analysis of today\u2019s UK GDP report from Heather Long, <\/strong>the chief economist at Navy Federal Credit Union.<\/strong><\/p>\n \u201cThis is the best quarterly economic growth in two years (since Q3 2023). The main drivers of the growth were strong consumption, unusually low imports and a little bit more government spending.<\/p>\n What\u2019s telling is that the AI boom did not play a big role in Q3 growth. This was a quarter when consumers returned to being the key driver of the U.S. economy. While the trade distortions did play a role, real final sales to domestic purchasers still came in at a robust 3%, a sign that demand remains healthy even in the midst of so many headwinds.<\/p>\n Consumers did pull back a bit on autos and household furnishings, but they continue to spend across almost every category, including discretionary items such as recreational goods. This bodes well for 2026. If the economy can avoid widespread layoffs, most American consumers can keep spending.\u201d<\/p>\n Share<\/p>\n Updated at\u00a009.14 EST<\/p>\n Today\u2019s US economic data are distorted, somewhat, by the trade disruption caused by Donald Trump\u2019s tariffs.<\/strong><\/p>\n That\u2019s because exports have a positive impact on GDP, while imports detract from it.<\/p>\n The Trump trade war caused a surge of imports in Q1 as businesses tried to beat the \u2018Liberation Day\u2019 tariffs in early April, followed by a slump once those tariffs were in (and also once warehouses were full of goods from overseas!).<\/p>\n Exports, in contrast, were subued in Q1 and Q2, but picked up sharply in Q3.<\/p>\n Navy<\/strong> Federal Credit Union<\/strong> economist Heather<\/strong> Long<\/strong> has posted the details:<\/p>\n Q3 GDP of 4.3% was boosted over a percentage point by the weird trade situation. (See yellow boxes below). Artificially low imports and “high” exports did make GDP look better.<\/p>\n But keep in mind: Consumption was strong in Q3 at +3.5%. (see green box below)<\/p>\n Bottom line: This a\u2026 pic.twitter.com\/AMgpZObeVE<\/a><\/p>\nClosing summary<\/h2>\n
US consumer confidence drops again<\/h2>\n
Analysis: strong consumption driving US growth<\/h2>\n