U.S. Economy Grows at 4.4% rate in Q3, Exceeding Expectations
U.S. Economy Exceeds Growth Expectations in Q3
Kristalina Georgieva, Director of the International Monetary Fund, discusses the robust health of the U.S. economy on ‘Mornings with Maria.’
The U.S. economy delivered a stronger than expected performance in the third quarter, as per estimates from the Commerce Department.
Q3 GDP Growth: Fastest in Two Years
On Thursday, the Bureau of Economic Analysis (BEA) released its final reading of the third quarter GDP. The report showed an annualized growth rate of 4.4% from July to September, surpassing economists’ predictions of 3.3%. This rate marks the fastest growth seen in two years.
The report highlights that the real GDP soared at an annualized rate of 3.8% in Q2, following a contraction of 0.6% in Q1. Collectively, these figures indicate that the U.S. economy expanded at a 2.5% annualized rate through the first three quarters of 2025.
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Role of Consumer Spending in GDP Rise
The BEA credits the increase in real GDP to a surge in consumer spending, exports, government expenditure, and investments. The third quarter also saw a decline in imports.
The report explained that compared to Q2, the acceleration in real GDP in Q3 was due to increases in investments, exports, and government spending, along with a quickened pace of consumer spending. Imports saw a smaller decrease in Q3 compared to Q2, the BEA added.
Impact of Government Shutdown on Data Collection
The 43-day government shutdown starting Oct. 1 impacted the data collection for the report, causing the BEA to postpone its initial estimate for Q3 until Dec. 23 and skip a second estimate.
The robust GDP reading was due to “resilient consumer spending, robust equipment and AI-related investment, a sizable boost from net international trade, and a rebound in federal government outlays,” according to EY-Parthenon chief economist, Gregory Daco.
Daco emphasized that the U.S. economy is neither “overheating” nor “stalling” but is adjusting to a unique blend of various factors. This includes a significant increase in tariffs, a significant decrease in net migration, a surge in AI investments, a jobless economic expansion, tax reform, and uncertainty over the Federal Reserve’s rate-cutting plans amid high inflation and a weak labor market.
Looking ahead, Daco predicts that real GDP will rise 3.2% in Q4 2025, resulting in an average GDP growth of 2.3% for 2025.
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