US economy growth surges in Q3 2025

US economy growth hits fastest pace in two years

The US economy growth accelerated sharply in the third quarter of 2025, expanding at an annualized rate of 4.3%, the Commerce Department reported Tuesday. This represents the fastest pace of growth in two years and is up from 3.8% in the second quarter.

Consumer spending, particularly among wealthier Americans, drove much of the growth, rising 3.5% compared with 2.5% in the previous quarter. Exports also rebounded strongly, increasing 8.8% after a 1.8% decline in the second quarter.

Federal spending contributed significantly to the GDP reading, with increased defense outlays and buyouts for federal employees helping push growth higher. However, economists expect the fourth-quarter figures may be dampened by the recent 43-day government shutdown, which reduced federal expenditures.

Tariffs, federal spending and US economy growth

President Donald Trump attributed the strong US economy growth to his administration’s tariff policies, which were increased significantly during the third quarter. On social media, Trump wrote that the tariffs were responsible for the “GREAT USA Economic Numbers” and promised further improvements, emphasizing “NO INFLATION & GREAT NATIONAL SECURITY.”

Analysts caution, however, that a pending Supreme Court case could overturn some tariffs, potentially resulting in refunds to importers and affecting future economic performance.

K-shaped recovery highlights disparities

While the headline GDP numbers suggest a robust economy, deeper analysis shows a more uneven recovery. Economists describe the current state as a “K-shaped” economy, where higher-income households and tech-focused sectors drive growth, while middle- and lower-income consumers remain cautious.

James Knightley, chief international economist at ING, noted that the economic growth is “concentrated among higher-income households and tech-led investment, while broader consumer confidence remains under pressure.”