U.S. GDP Grows Slightly More Than Expected in 2025
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, grew at a 3.5% annualized rate in the third quarter.
Quick overview
- U.S. GDP grew at an upwardly revised annualized rate of 4.4% in the third quarter of 2025, surpassing initial expectations.
- Consumer spending increased by 3.5%, contributing significantly to economic activity, while final sales to private domestic purchasers rose at a more moderate pace of 2.9%.
- The growth was primarily driven by exports and business investment, alongside a narrower trade deficit.
- A K-shaped economic recovery is evident, with higher-income households benefiting more than low- and middle-income families, exacerbated by import tariffs.
Data released by the Bureau of Economic Analysis showed that consumer spending and a narrower trade deficit were key drivers of the increase.
U.S. gross domestic product (GDP) expanded at an upwardly revised annualized rate of 4.4%, the fastest pace since the third quarter of 2023, according to the Commerce Department’s Bureau of Economic Analysis in its updated estimate for the third quarter of 2025.
As a result, the U.S. economy grew slightly faster than initially thought. Economists surveyed by Reuters had expected GDP to hold at a 4.3% pace, after expanding at a 3.8% rate in the second quarter.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, grew at a 3.5% annualized rate in the third quarter. However, a key gauge of underlying domestic demand—final sales to private domestic purchasers—rose at a more moderate 2.9% pace.
Meanwhile, profits from current production increased at an annualized rate of $175.6 billion in the third quarter, an upward revision of $9.5 billion.
Drivers of GDP growth
Exports and business investment were the main contributors behind the upward revision for the July–September period. Imports, which subtract from GDP, also increased. Consumer spending and a narrower trade deficit were the primary forces supporting growth in the third quarter.
Economists also noted that activity has taken on what they described as a K-shaped pattern, in which higher-income households and large corporations are bearing most of the weight of economic growth. They attributed this dynamic to President Donald Trump’s policies, including aggressive import tariffs that have pushed prices higher.
Against this backdrop, low- and middle-income households are struggling to substitute purchases, while a booming stock market and still-elevated home prices continue to shield higher-income households from inflation.
A similar contrast can be drawn among companies: large firms have sufficient resources to absorb higher import tariff costs, while smaller businesses are barely staying afloat as they also face a shrinking supply of low-cost labor amid a crackdown on immigration.
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