The U.S. economy grew at a faster pace than expected in the third quarter, according to the Commerce Department’s estimate.
The Bureau of Economic Analysis (BEA) on Tuesday released its initial estimate of third-quarter GDP, which showed the economy grew at an annualized rate of 4.3% in the three-month period including July, August and September.
That figure topped the expectations of economists polled by LSEG, who had estimated 3.3% GDP growth in the third quarter.
The report also found that real GDP rose at an annualized rate of 3.8% in the second quarter. That followed a GDP contraction of 0.6% in the first quarter. Taken together, those three readings indicate the U.S. economy grew at a 2.5% annualized rate through the first three quarters of 2025.
INFLATION REMAINED ELEVATED IN NOVEMBER AS FED CONSIDERS PAUSING INTEREST RATE CUTS
The BEA said that the rise 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. Imports also declined in the third quarter.
“Compared to the second quarter, the acceleration in real GDP in the third quarter reflected a smaller decrease in investment, an acceleration in consumer spending, and upturns in exports and government spending. Imports decreased less in the third quarter,” the BEA said.
US ADDED 64K JOBS IN NOVEMBER AFTER LOSING 105K IN OCTOBER, DELAYED REPORT SHOWS
The report noted that real final sales to private domestic purchasers – which is the sum of consumer spending and gross private fixed investment – rose 3% in the third quarter, slightly faster than the increase of 2.9% in the second quarter.
The price index for gross domestic purchases rose 3.4% in the third quarter, a notable increase from the 2% increase in the second quarter. The personal consumption expenditures (PCE) index – an inflation gauge that is also measured in a standalone report that can yield different readings – rose 2.8% in the third quarter, compared with an increase of 2.1% in the prior quarter.
POWELL ACKNOWLEDGES LABOR MARKET SLOWDOWN BUT REJECTS FEARS OF STEEP DECLINE
The third-quarter figure is expected to be revised with the release of a subsequent estimate. Typically, the BEA releases an initial estimate, a second estimate and a third estimate that serves as the final revision.
The government shutdown delayed the release of the initial third-quarter estimate, which was due at the end of October. It also affected the release of the second estimate, which was originally scheduled for Nov. 26.
The BEA said that its initial estimate replaces the advance and second estimates, meaning there will just be one additional third-quarter GDP release. Currently, the BEA’s schedule shows the final third-quarter GDP release on Jan. 22.
Read the full article here
