US Economy Achieves Rapid Growth of 4.3% in Q3 2025

Tue Dec 23 2025 23:13:11 GMT+0200 (Eastern European Standard Time)

The US economy recorded its fastest growth rate in two years, with a remarkable 4.3% expansion driven by increased consumer spending and exports.

The latest economic report reveals that the US economy surged at an annual rate of 4.3% during the third quarter of 2025, marking the highest growth rate in two years. Key factors contributing to this growth included a substantial rise in consumer spending and a rebound in exports, despite challenges posed by inflation and changes in government spending. Analysts expressed optimism about the economy's resilience, although concerns about rising household costs persist.

The US economy picked up speed over the three months to September, as consumer spending jumped and exports increased.

The world's largest economy expanded at an annual rate of 4.3%, up from 3.8% in the previous quarter. That was better than expected and marked the strongest growth in two years.

The report, which had been delayed by the US government shutdown, sheds light on an economy that has been buffeted by dramatic changes to trade and immigration policies, as well as persistent inflation and cuts to government spending.

However, while that has led to sharp swings in some areas, such as imports and exports, the underlying economy has maintained solid momentum, outperforming many forecasts.

This is an economy that has defied doom and gloom expectations basically since the beginning of 2022, said Aditya Bhave, senior economist at Bank of America. Speaking to the BBC's Business Today programme, he described the economy as very very resilient and expressed confidence that this would continue.

The overall growth figure for the third quarter was much stronger than expected, with most analysts anticipating a rate of about 3.2%. It was boosted by consumer spending, which rose at an annual rate of 3.5%, compared to 2.5% in the previous quarter, despite a slowing job market, with households increasing expenditures on health care services.

Imports, which constrain growth, continued to decline due to new taxes on incoming shipments enacted earlier this year. Meanwhile, exports bounced back dramatically, surging by 7.4%, and government spending also rebounded due to increased defense outlays.

These factors helped offset a slowdown in business investment and a struggling housing market affected by high interest rates, which pose affordability challenges due to supply constraints.

Michael Pearce, chief US economist at Oxford Economics, commented that the economy was well positioned heading into 2026, benefitting from tax cuts and recent interest rate reductions by the US central bank. He mentioned that underlying measures are indicative of a solid expansion.

However, some analysts raised concerns about the sustainability of this strong growth rate due to rising costs impacting households, particularly among lower- and middle-income earners. The Fed's preferred inflation gauge, the personal consumption expenditures price index, rose to 2.8% in this quarter. This increase has been felt more acutely by lower-income households, as higher-income consumers have continued their spending behavior.

Further insights showed that more recent surveys and credit card data indicated a potential reduction in spending from households, attributed to a weak labor market, stagnant real incomes, and the diminishing effects of pandemic-era savings.