On Tuesday, a report from the U.S. Bureau of Economic Analysis showed that the U.S. economy expanded at its fastest pace in two years during the third quarter, supported by resilient consumer and business spending as well as more stable trade policies. However, economists warned that this growth momentum is unlikely to be sustained.
The preliminary annualized growth rate of U.S. real GDP for the third quarter was 4.3%, significantly exceeding expectations of 3.3%, with the previous value being 3.8%. The preliminary quarterly growth rate of U.S. real personal consumption expenditure for the third quarter was 3.5%, higher than the expected 2.7% and the prior value of 2.5%. The preliminary annualized growth rate of the core PCE price index for the third quarter was 2.9%, in line with expectations and up from the previous value of 2.6%.
Following the release of U.S. GDP data, spot gold fell $5 in the short term. The U.S. dollar index rose slightly by 10 points.
This delayed report indicated that the U.S. economy maintained its growth momentum in the middle of this year as consumers continued to drive activity and potential reversals of Trump's tariffs loomed.
Diane Swonk, chief economist at KPMG, stated: 'This represents the strongest six months of growth since the end of 2023, but it doesn’t feel that way to most people. Consumers are still spending, and investments in data centers have been substantial, but we are in a very strange situation where the economy is growing without creating jobs.'
Despite robust previous growth and recent expansion, many economists anticipate that economic growth in the fourth quarter will be very weak or even stagnant, primarily due to the impact of a 43-day government shutdown starting on October 1, which has affected spending and investment.
GDP refers to the total output of all goods and services and is the broadest measure of economic activity.
Tariff-related purchasing patterns and trade volatility have had a significant impact on this year’s data, resulting in negative figures for the first three months of the year followed by an exceptionally high growth rate in the subsequent quarter. In the third quarter, car sales surged as Americans rushed to purchase vehicles ahead of planned tariff increases by the Trump administration, driving economic growth. However, economists noted that this peak in growth has now passed.
'This report, which should have been released in October, is already old news,' said Chris Rupkey, chief economist at financial markets research firm FwdBonds.
Economists generally expect that U.S. GDP growth for the entire year will be around 2%, a pace considered solid but not strong.
For businesses across the United States, 2025 has so far been marked by deep uncertainty. Many companies have postponed large-scale procurement and hiring as they await clarity on tariffs, immigration policies, and other measures from the Trump administration.
Regarding the economic growth outlook for 2026, economists still anticipate a moderate rebound in the U.S. economy, with households set to receive tax rebates, and a Supreme Court ruling potentially overturning Trump's comprehensive global tariffs. The Federal Reserve's latest projections echo this view, with Powell citing supportive fiscal policy, spending on AI data centers, and sustained household consumption as factors driving an expected acceleration in growth next year.
Editor/Doris