U.S. GDP Q3 2025 Rises 4.3%, Exceeds Forecasts

U.S. GDP for the third quarter of 2025 expanded at a 4.3% annualized pace on Dec. 23, driven by consumer spending, exports, and government outlays. Core personal consumption expenditures (PCE) inflation climbed above 2%, while a 43-day government shutdown delayed Bureau of Economic Analysis (BEA) data, raising the risk of future revisions.

Q3 Growth and Composition

The Commerce Department’s BEA released the initial Q3 GDP estimate after a 43-day government shutdown delayed routine reporting and postponed earlier advance and second estimates. The figure marked the strongest quarterly growth in two years, surpassing consensus forecasts of roughly 3.0% to 3.3%.

After a weak start to 2025, growth momentum recovered. Real GDP contracted at a 0.6% annualized rate in the first quarter but rebounded to 3.8% in the second quarter, leaving the year-to-date pace near 2.5% annualized.

Consumer spending was a key driver, with the personal consumption expenditures contribution rising about 0.5 percentage point from the prior quarter. Net trade also contributed positively as exports surged at an 8.8% annualized rate, and federal and state government spending increased from a recent low.

Private domestic investment declined, though less than in the previous quarter, while imports contracted at a 4.7% annualized pace. A demand measure that excludes inventory changes—real final sales to private domestic purchasers—advanced at a 3.0% annualized rate, slightly up from 2.9% in the second quarter.

Inflation, Labor, and Outlook

PCE inflation rose to 2.8% annualized for the quarter, with core PCE inflation at about 2.9%. The gross domestic purchases price index accelerated to roughly 3.4%, up from 2.0% in the second quarter.

Labor data showed mixed signals. The unemployment rate reached 4.6% in November 2025, the highest since 2021. Payrolls increased by 64,000 jobs in November following a reported loss of 105,000 in October, reflecting delayed counts.

Economists expect growth to slow to about a 2% annualized pace in the fourth quarter, citing the government shutdown’s impact on paychecks and spending. One forecast estimated roughly $14 billion in unpaid wages from the shutdown, which is expected to temper fourth-quarter consumption. Real consumer spending is projected to rise about 2.6% in 2025 before slowing to roughly 1.6% in 2026. Real GDP is forecast to ease to near 1.9% in 2026, with unemployment moving toward the mid-4% range.

The BEA will issue its next revision to the Q3 figures on Jan. 22, 2026. Market participants and policymakers will watch closely for any adjustments to the initial estimate.