The US economy defied expectations in the third quarter of a year marked by uncertainty.
US real gross domestic product rose at an annualized rate of 4.3% in the third quarter, exceeding the 3.3% expected and more than the 3.8% growth in the second quarter.
"The increase in real GDP in the third quarter reflected increases in consumer spending, exports, and government spending that were partly offset by a decrease in investment," the Bureau of Economic Analysis said.
Heather Long, the chief economist at Navy Federal Credit Union, wrote on X that "AI investment wasn't a big factor" in the third quarter and instead consumption is a "key driver," particularly due to spending from wealthier Americans.
Real personal consumer spending rose 3.5% in the third quarter, more than the 2.5% rise in the second quarter. Imports again fell, but not by as much as in the second quarter, declining 4.7% in the third quarter and falling 29.3% in the previous quarter. Meanwhile, exports rose 8.8% in the third quarter, after a 1.8% drop in the previous one.
The report was a surprise on the upside because the economy in 2025 has faced some headwinds. The effects of tariff announcements were reflected in imports, particularly in the first quarter, when real GDP declined. The fourth-quarter estimates may also be affected by the recent record-long government shutdown. The Congressional Budget Office said in late October that the shutdown likely lowered real GDP while it was ongoing and that growth "will be temporarily higher than it would have been otherwise" as the economy rebounds post-shutdown.
The new Bureau of Economic Analysis report follows other recent data releases that show a mixed view of the US economy. The Bureau of Labor Statistics recently published inflation and labor market reports that showed unemployment at its highest rate since September 2021 and inflation unexpectedly cooling.
Mark Hamrick, Bankrate's senior economic analyst, said in an email that Americans will have to wait until next year to get more clarity on the economy's performance. He added that there will also be some benefits for Americans from what President Donald Trump called his "one big beautiful" bill, including federal income tax refunds.
"The good news is that the outlook for growth is improving as we enter 2026, as noted also recently by the Federal Reserve," he said. Federal Reserve Chair Jerome Powell said in a December press conference that the "baseline would be solid growth next year" due to factors like AI and consumer spending.
The Bureau of Economic Analysis will publish an updated GDP estimate for the third quarter on January 22.
"A key question for consumers, who power the U.S. economy, is whether the job market stabilizes or even improves modestly in the months ahead," Hamrick said. "If not, their resilience and the resilience of the economy will be put to the test."
