US economic growth accelerated sharply in the third quarter of 2025, offering fresh evidence that the world’s largest economy has remained resilient despite trade uncertainty, elevated prices and signs of cooling in the labor market.
New federal data showed that output expanded at a pace that exceeded most forecasts, driven largely by consumer spending and government expenditures.
The Commerce Department reported Tuesday that gross domestic product increased at a four point three percent annual rate from July through September, a notable pickup from the prior quarter and one of the strongest showings of the year.
The stronger than expected reading came after months of concern that tariffs, slowing global demand and higher borrowing costs could drag on US economic growth.
Surveys have shown consumer sentiment at subdued levels, while hiring has slowed from the rapid pace seen earlier in the recovery.
Even so, the roughly thirty trillion dollar economy entered the final months of the year on firmer footing than many analysts anticipated.
Federal officials said the data reflected steady household demand and a continued willingness by businesses and the government to spend, despite lingering uncertainty.
Economists cautioned against reading too much into a single quarter but acknowledged the breadth of the expansion.
Michael Pearce, chief US economist at Oxford Economics, said the report pointed to “an economy that is mostly solid and still generating momentum, even if some of the quarterly data remains noisy.”
Pearce said much of the strength continued to come from higher income households, which have been better positioned to absorb higher prices and borrowing costs. “That divide is an important part of the story and one that will matter going forward,” he said.
Paul Ashworth, chief North America economist at Capital Economics, said consumption once again played a central role. “Even as investment softened, spending by households helped maintain considerable momentum,” he said.
Consumer spending, which typically accounts for about seventy percent of economic activity, rose at a three point five percent annualized rate in the quarter. Government outlays, including increased military spending, also contributed to the gain.
Corporate profits surged by one hundred sixty six billion dollars, a sharp rebound from the modest increase recorded in the previous quarter. At the same time, business investment cooled, with declines in spending on structures and intellectual property.
A closely watched measure of underlying demand that strips out trade and government effects remained steady, suggesting a stable foundation for US economic growth even as certain sectors slowed.
Disposable personal income, adjusted for inflation and taxes, was flat during the quarter, highlighting how price pressures continue to weigh on household purchasing power.
For many households, the stronger growth figures have not fully eased day-to-day financial strain. Maria Lopez, a retail worker in Phoenix, said higher food and fuel costs remain a challenge.
“I hear the economy is doing well, but groceries and rent are still expensive,” she said. “It feels like we have to be more careful than before.”
Small business owners offered a mixed picture. David Nguyen, who runs a logistics company outside Chicago, said demand had held up better than expected. “Shipping volumes are steady, and clients are still spending, though they are watching costs closely,” he said.
Looking ahead, economists said the durability of US economic growth will depend on whether consumer spending can remain strong as savings decline and wage gains moderate.
Investment tied to artificial intelligence and data center construction is expected to continue, though recent data suggests that growth in those areas may be uneven.
Orders for durable goods fell in October, signaling caution among manufacturers. At the same time, exports have picked up in recent months, which administration officials have attributed to trade policies and stronger overseas demand.
Federal Reserve policymakers are expected to monitor incoming data closely as they assess the balance between supporting growth and containing inflation. The third quarter report underscored the economy’s ability to expand at a robust pace despite ongoing challenges.
While disparities remain between higher and lower income households and some sectors show signs of strain, the latest figures suggest that US economic growth entered the final stretch of the year with notable momentum and a degree of resilience that had been in doubt earlier in 2025.
