U.S. Q3 GDP grows 4.3% as PCE inflation rises to 2.8%
The U.S. economy expanded at a surprisingly strong 4.3% annualized rate in Q3 2025, driven by increases in consumer spending, exports and government spending — consumer spending itself rose 3.5% (up from 2.5% in Q2) and the result easily beat a FactSet-surveyed 3% forecast. At the same time the Federal Reserve’s preferred inflation gauge, the headline PCE index, accelerated to a 2.8% annual rate (from 2.1% in Q2) while core PCE climbed to 2.9% (from 2.6%), underscoring that inflation remains stubbornly high.
📌 Key Facts
- U.S. real GDP grew at a 4.3% annualized rate in Q3 2025, driven by increases in consumer spending, exports and government spending.
- Consumer spending rose at a 3.5% annual rate in Q3 2025, up from a 2.5% annual rate in Q2.
- The Fed’s preferred inflation gauge, the headline PCE index, ran at a 2.8% annual rate in Q3 2025, up from 2.1% in Q2.
- Core PCE inflation (excluding food and energy) was 2.9% in Q3 2025, up from 2.6% in Q2.
- The 4.3% Q3 GDP print substantially beat expectations: analysts surveyed by FactSet had forecast 3.0% growth for the quarter.
📊 Relevant Data
The US economy's 4.3% GDP growth in Q3 2025 was spurred by massive investment in artificial intelligence and robust consumer spending.
US economy grew strongly in third quarter, GDP report says — The Guardian
Personal consumption expenditures grew at an annual rate of 3.5% in Q3 2025, contributing to GDP growth.
Q3 U.S. GDP climbs 4.3%, past consensus, in BEA's first estimate — Seeking Alpha
The Trump administration's tariffs are projected to reduce the U.S. growth rate by 0.23 percentage points in 2025.
Impact of tariffs on tax and trade in 2025 — Thomson Reuters
The Trump administration's new 2025 tariffs are estimated to increase the number of Americans living in poverty by between 650,000 and 875,000.
The Effect of Tariffs on Poverty — The Budget Lab at Yale
Trump's tariffs could increase the poverty rate to 10.7% from 10.4%.
Trump's tariffs could push nearly 1 million Americans into poverty, report finds — CNN
📰 Sources (2)
- Confirms that the 4.3% annualized GDP growth in Q3 2025 was driven by increases in consumer spending, exports and government spending.
- Reports that the Fed’s preferred inflation gauge, the headline PCE index, ran at a 2.8% annual rate in Q3, up from 2.1% in Q2.
- Adds that core PCE inflation (excluding food and energy) was 2.9% in Q3, up from 2.6% in Q2.
- Details that consumer spending grew at a 3.5% annual rate in Q3, compared with 2.5% in Q2.
- Notes that FactSet-surveyed analysts had forecast 3% GDP growth for Q3, underscoring how much the 4.3% figure beat expectations.