The US economy grew at an annualised rate of 4.3 per cent in the third quarter, according to official data released on Tuesday that far surpassed economists’ expectations and was well in advance of previous quarters.
The rise in gross domestic product (GDP), which received a boost from spending related to healthcare and artificial intelligence, compared with estimates of a 3.2 per cent rise among economists polled by Bloomberg.
The figure from the Bureau of Economic Analysis, which was delayed by the recent government shutdown, showed increases in consumer and government spending as well as exports, while business investment slowed and imports fell.
The report comes after GDP reports for the first two quarters were distorted by big trade swings.
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“The strong rise in GDP in Q3 was flattered by a rise in defence spending and a big contribution from net trade as imports declined, but underlying measures are consistent with a solid expansion,” said Michael Pearce, chief US economist at Oxford Economics.
The world’s biggest economy shrank by an annualised 0.5 per cent in the first quarter as businesses rushed to buy foreign goods in advance of the implementation of Donald Trump’s sweeping tariffs, before growing at a 3.8 per cent rate in the second quarter as imports slid.
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Imports, which have a negative effect on GDP, slipped again in the third quarter.
The market reaction to Tuesday’s data was muted, with many on Wall Street trading desks out of the office. Treasury yields ticked up, though the dollar index and stock futures were little moved.
Analysts expected the report to have little effect on Federal Reserve decision-making in 2026, after the US central bank cut interest rates three times this year.
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“These figures will put a little bit of pressure on Treasuries, but I don’t think this changes anything for the Fed,” said Andy Brenner, head of international fixed income at NatAlliance Securities, adding that he expected the central bank to hold rates for the first few months of 2026.
Third-quarter growth was fuelled in large part by strong consumer spending on healthcare services, which added 0.76 percentage points to the overall growth rate.
Net imports contributed 1.6 points, while government spending, led by federal defence outlays, added 0.4 points.
A slowdown in consumer spending, alongside issues related to the shutdown, are expected to weigh on growth in the final quarter of 2025. Data for this period has also been delayed by the shutdown and will be released next year. – Copyright The Financial Times Limited 2025
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