US economy grew strongly in third quarter, GDP report says | US economy
The U.S. economy was on the rise over the summer, the commerce department announced Tuesday in one of the last 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 4.3% annually in the third quarter, well above expectations and the fastest increase in two years.
The surprisingly strong growth “reflected increases in consumer spending, exports, and government spending, although these increases were partially offset by declines in investment,” according to the Bureau of Economic Analysis.
Economists had expected the annual growth rate in the second quarter to slow from 3.8 percent to 3.2 percent.
GDP numbers will further complicate the Federal Reserve’s decision-making process. The Fed announced its third rate cut of the year earlier this month on signs that the job market is weakening, but remains divided on how it should proceed.
The Fed’s dual mission is to maintain price stability while maximizing employment. Inflation remains stubbornly above the 2% annual target; This supports the argument that rates should remain high to reduce prices; But cracks in the job market suggest lower rates could help keep unemployment from rising.
The Fed’s decisions are also clouded by a lack of data. Like other major economic reports, the latest GDP figures were delayed by the government shutdown that lasted from October 1 to November 12 and the furloughing of government employees, including those responsible for collecting economic data.
The U.S. economy has demonstrated resilience in a year of extraordinary challenges. Donald Trump announced sweeping tariffs on major U.S. trading partners in April, diluting or rolling back many of the duties while the uncertainty they caused rattled businesses and consumers.
The US economy contracted in the first quarter of 2025 as businesses tried to avoid tariffs that Trump threatened with an unprecedented increase in imports. However, GDP growth soon recovered, driven by large investments in artificial intelligence and strong consumer spending.
