Consumer spending, exports, and business investment drive broad-based growth — despite inflation headwinds.
The US economy entered the final quarter of 2025 on an unusually confident footing. Stock markets touched all-time highs across the third quarter of the year, buoyed by what Treasury and Federal Reserve data described as a period of solidified growth — with consumer demand holding up and business investment tracking steadily higher. For many on Wall Street and in boardrooms across the country, it felt like the economic expansion was finding a durable rhythm.
Official estimates from the Bureau of Economic Analysis would later confirm that real gross domestic product expanded at an annualized rate of 4.3 percent in the third quarter — a figure that substantially beat analyst forecasts of approximately 3.3 percent, according to LSEG polling. The performance followed a 3.8 percent gain in Q2, and represented a dramatic recovery from a contraction in the first quarter of the year.
The engine behind that growth was multifaceted. Consumer spending accelerated meaningfully during the July–September window, with personal consumption serving as the primary driver of quarterly gains. Exports also rose — led by capital goods and professional services — while government outlays at both state and federal levels ticked higher. Imports fell, a development that, because they subtract from GDP calculations, added further to the headline number.
Treasury Department data released in early November underscored the quarter’s strength, noting that stock markets had set additional records even after the third quarter ended, with earnings growth described as stable and Treasury yields easing. The 10-year note yield had drifted lower — nearing 4 percent — suggesting bond markets were also pricing in a relatively benign inflation trajectory.
Labor markets through July and August showed modest but steady hiring gains, consistent with prior-quarter pacing, although analysts cautioned that workforce dynamics were being reshaped by immigration policy changes affecting both labor supply and demand. Non-housing core services inflation was running at approximately 3.8 percent over the year through September — elevated, but declining compared to the prior year.
Deloitte’s quarterly economic forecast highlighted artificial intelligence as a meaningful and growing contributor to business investment, with data center construction representing a particular bright spot. The consultancy forecast that AI-related spending would continue supporting capital expenditure well into future quarters, even as broader investment growth remained relatively concentrated in that sector. It noted, however, that tariff-induced inflation pressures would likely keep the Federal Reserve cautious.
The picture heading into Q4 was therefore one of genuine optimism tempered by known risks. Consumer sentiment had already begun softening slightly amid persistent inflation and tariff uncertainty. But for businesses operating in sectors tied to technology investment, services exports, and domestic consumption, the Q3 data reinforced confidence that the expansion had room to run — at least for now.
Sources
1. “Gross Domestic Product, 3rd Quarter 2025 (Initial Estimate)” — U.S. Bureau of Economic Analysis, December 23, 2025. https://www.bea.gov/news/2025/gross-domestic-product-3rd-quarter-2025-initial-estimate-and-corporate-profits
2. “Economy Statement for the Treasury Borrowing Advisory Committee” — U.S. Department of the Treasury, November 3, 2025. https://home.treasury.gov/news/press-releases/sb0301
3. “US Economy Hits 4.3% Growth, Highest in 2 Years” — Fox Business, December 23, 2025. https://www.foxbusiness.com/economy/us-economy-q3-2025-initial
4. “US Economic Forecast Q4 2025” — Deloitte Insights, December 19, 2025. https://www.deloitte.com/us/en/insights/topics/economy/us-economic-forecast/united-states-outlook-analysis.html
5. “U.S. Economy at a Glance” — U.S. Bureau of Economic Analysis. https://www.bea.gov/news/glance
