WASHINGTON, D.C.—Real gross domestic product (GDP) increased at an annualized rate of 4.3 percent in the third quarter of 2025 (July–September), according to the initial estimate released December 23, 2025, by the U.S. Bureau of Economic Analysis (BEA).
This marks an acceleration from the 3.8 percent growth recorded in the second quarter of 2025 and represents the strongest quarterly expansion in two years. The figure significantly exceeded economist expectations of around 3.3 percent.
The increase primarily reflected robust gains in consumer spending (up 3.5 percent), exports (up 8.8 percent), and government spending, partially offset by a decrease in private investment. Imports declined, which adds to GDP in the calculation.
Imports surged in Q1 as companies stockpiled goods to preempt impending tariffs, which contributed to a brief economic contraction of 0.6% annualized in that period. By Q3, the tariffs had taken fuller effect, leading to the import pullback and helping propel the strong rebound in growth, alongside robust consumer spending (up 3.5%) and AI-related business investments.
The strong Q3 growth—outperforming expectations by 1 point—counters immediate recession fears, showing resilience driven by domestic factors and lower imports.
What is GDP and Why it Matters
GDP is basically the total value of everything a country produces, like goods and services, over a period like a quarter or year. It shows if the economy is growing strong (more jobs, better living) or slowing down. All governments around the world use it to decide on policies like taxes or spending. It’s not perfect—it ignores things like happiness or inequality—but it’s a key measure of economic health.
Author: Mario Lotmore
