The U.S. economy expanded at a far stronger pace than anticipated in the third quarter, underscoring the resilience of consumer demand even as inflation pressures remain elevated.
According to a delayed report released Tuesday by the U.S. Department of Commerce, gross domestic product grew at an annualized rate of 4.3% between July and September, well above the 3.2% increase expected by economists surveyed by Dow Jones. The data was originally scheduled for late October but was postponed due to the government shutdown, replacing what would have been a second GDP estimate.
The standout driver was consumer spending, which accelerated sharply to 3.5% growth in the third quarter from 2.5% in the prior period. Gains in exports and government spending also contributed meaningfully, while a smaller-than-expected decline in private fixed investment reduced drag on overall growth. A closely watched gauge known as real final sales to private domestic purchasers rose 3%, signaling solid underlying demand within the private economy.
Despite the robust growth, inflation pressures intensified. The personal consumption expenditures price index — the primary inflation gauge monitored by the Federal Reserve — increased 2.8% over the quarter, while core PCE, which strips out food and energy, climbed 2.9%. Both readings moved further above the Fed’s 2% target. The chain-weighted price index, which adjusts for changes in consumer buying behavior, jumped 3.8%, exceeding forecasts by a full percentage point.
Corporate America also posted a strong showing. Corporate profits surged by $166.1 billion, a 4.2% increase, marking a dramatic acceleration from the modest $6.8 billion gain recorded in the second quarter.
Market reaction was muted, however, as investors largely viewed the data as backward-looking. U.S. stock futures edged slightly lower following the release, while Treasury yields remained elevated. Even so, the report reinforces a key narrative heading into year-end: the U.S. economy entered the final stretch of 2025 with considerable momentum, powered primarily by the American consumer.
