US GDP Growth Jumps in Q3 as Economy Outpaces Forecasts
The US economy picked up notable momentum in the third quarter of 2025, with gross domestic product expanding at an annualized rate of 4.3% quarter over quarter, according to the latest data.
The result comfortably exceeded market expectations of 3.3% and marked an acceleration from the 3.8% pace recorded in the second quarter.
- US GDP grew 4.3% annualized in Q3, beating expectations and accelerating from Q2.
- Consumer spending remained the primary driver, rising 3.0% annualized.
- Inflation measures surprised to the upside, with the GDP price index at 3.8%.
- Durable goods orders fell sharply in October, pointing to manufacturing softness.
The report, published by the U.S. Bureau of Economic Analysis, paints a picture of an economy driven primarily by resilient household demand, even as inflation pressures remained elevated and parts of the industrial sector showed signs of cooling.
Consumer spending remains the main engine
Personal consumption expenditures rose at a 3.0% annualized rate in the third quarter, underscoring the continued strength of the US consumer. Spending gains were broad-based and helped offset softer trends elsewhere in the economy, including business investment. On a year-over-year basis, GDP increased by 2.3%, reflecting solid underlying growth despite tighter financial conditions earlier in the year.
Exports and government spending also contributed positively to headline growth, while imports declined, providing an additional mechanical boost to GDP calculations. However, investment activity acted as a partial drag, suggesting that some companies remain cautious about longer-term capital commitments.
Inflation signals mixed picture
Inflation-related components of the report were less reassuring. The core PCE price index, the Federal Reserve’s preferred inflation gauge, rose at an annualized rate of 2.9% quarter over quarter, matching expectations but still running above the central bank’s long-term target. Meanwhile, the broader GDP price index jumped 3.8% annualized, well above the 2.7% estimate, pointing to lingering price pressures across the economy.
These figures suggest that while growth is accelerating, inflation remains sticky enough to complicate the outlook for monetary policy in the months ahead.
Manufacturing data adds note of caution
Outside of GDP, incoming October data hinted at softer momentum in the goods-producing sector. Preliminary figures showed durable goods orders falling 2.2% month over month, a steeper decline than the expected 1.5% drop. The pullback highlights uneven conditions in manufacturing and capital goods demand, contrasting with the strength seen in services and consumer-driven activity.
Taken together, the data signal an economy that is growing faster than anticipated but still facing challenges from inflation and uneven sector performance. For markets, the combination of strong growth and firm price pressures may reinforce expectations that policy easing will remain gradual rather than imminent.
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