Economy Surges Beyond Predictions in Third Quarter

Key Takeaways

• The U.S. economy grew at an annual rate of 4.3% in the third quarter, the fastest in two years and blowing past forecaster expectations.
• Tariffs dragged down imports, which count against the GDP.
• Consumer spending, the main engine of economic growth, accelerated.

The U.S. economy grew much faster than forecasters had expected in the third quarter, thanks to a drop in imports and a surge in consumer spending.

The inflation-adjusted Gross Domestic Product grew at an annual rate of 4.3% in the third quarter, the fastest since 2023 and up from 3.8% growth in the second, the Bureau of Economic Analysis said Tuesday. That blew past the 3.2% growth forecasters had expected, and was well above the 2.6% average annual growth rate over the previous four years.

What This Means For The Economy

The accelerating GDP of the U.S. economy in the third quarter is a good sign for future economic growth and standards of living, if it can be maintained.

The surge in economic growth partly reflected a decrease in imports, which count against the GDP, and have declined as a result of President Donald Trump's tariff campaign.

Other parts of the economy accelerated, including exports, government spending, and the all-important rate of consumer spending, which is the largest factor in the GDP and rose 3.5%. The economy has grown rapidly in the middle of the year after shrinking in the first quarter due to a frenzy of importing to get ahead of the tariffs.

"Policy changes, especially around tariffs, have caused large swings in behavior as consumers and businesses attempted to avoid the negative consequences of increased tariffs," Scott Hoyt, an economist at Moody's Analytics, wrote in a commentary.

That means the surge of economic growth may be more fragile than it looks on paper. Businesses have been slower than expected to pass the cost of the import taxes along to customers, but consumers and economists anticipate more price increases are coming.

Related Education

Gross Domestic Product (GDP) Formula and How to Use It

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"Since prices have not responded quickly, consumers and businesses have been buying ahead of feared price increases, pulling economic activity forward and supporting growth in the last two quarters, likely at the expense of future growth," Hoyt wrote.

The GDP has been a more volatile indicator of the economy's health than usual lately. Forecasters expect the GDP to drop in the fourth quarter because of the government shutdown in October and November and rebound again in 2026.

Tuesday's GDP report had been scheduled to be released in October, but was delayed by the government shutdown. The BEA will revise its GDP estimate and release a final tally next month.

Update, Dec. 23, 2025: This article was updated with additional information from the report and commentary from an economist.

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