US economy grows 4.4%, strongest expansion in two years
What's the story
The US economy has witnessed its fastest growth in two years, with a 4.4% annualized expansion rate in the third quarter of 2025. The figure is an upgrade from the initial estimate of 4.3% and a significant jump from the previous quarter's growth rate of 3.8%. The data was released by the Bureau of Economic Analysis on Thursday, highlighting a strong performance driven mainly by consumer spending.
Spending surge
Consumer spending fuels economic growth
Consumer spending, which makes up 70% of the US GDP, grew at a healthy pace of 3.5%. This was led by an increase in service spending like healthcare (up 3.6%) and goods spending, which increased by 3%, with durable goods such as cars seeing a modest increase of just 1.6%. A spike in exports and a fall in imports also contributed to the strong third-quarter growth performance.
Investment boost
Business investment and economic resilience
Business investment, excluding homebuilding, grew at a rate of 3.2%, partly due to bets on artificial intelligence (AI). Despite uncertainty over current economic policies and trade tensions, the economy has remained resilient. However, many Americans remain unhappy with the state of the economy and especially high living costs. The growth surprise complicates the outlook for Federal Reserve policy, with some economists expecting a pause on further rate cuts as policymakers monitor data.
Economic divide
Disparity in economic perception and job market
The difference between consumer sentiment and strong spending numbers may indicate a "K-shaped economy." Wealthier Americans are spending more, their incomes boosted by market gains and growing investments. Meanwhile, lower-income households are struggling with stagnant pay and high prices. The job market also appears weaker than the overall economy, with employers adding just 28,000 jobs a month since March.