U.S. Economy Surges at a 4.3% Annualized Pace in Third Quarter, Exceeding Expectations
WASHINGTON — The U.S. economy unexpectedly accelerated in the third quarter of 2025, growing at a 4.3% annualized rate, significantly surpassing economists’ forecasts and marking the fastest pace of expansion in nearly two years, according to the latest government GDP data released Tuesday.
Gross domestic product (GDP) — the broadest measure of the nation’s total output of goods and services — expanded more robustly than anticipated from July through September, beating earlier projections that had forecast slower growth. Consumer spending, a primary engine of the economy, showed marked strength, while government expenditures and a surge in exports further bolstered the figures.
Despite the positive headline numbers, inflation continues to run above the Federal Reserve’s 2% target, with the preferred personal consumption expenditures (PCE) inflation gauge rising to 2.8% in the third quarter. Core PCE — which excludes volatile food and energy costs — also climbed, signaling persistent price pressures that could influence future interest rate decisions by the Fed.
Economic analysts point out that strong spending by households and continued growth in exports helped underpin the unexpected momentum, while business investment showed modest improvement compared with recent quarters. However, the labor market has shown signs of cooling, with job gains slowing and unemployment edging higher in the latter part of the year.
The latest GDP update is the first of three estimates for third-quarter growth, with revisions expected in coming months. As policymakers and investors digest the data, attention will remain focused on inflation trends and the Federal Reserve’s next monetary policy moves heading into 2026.
