The U.S. Bureau of Economic Analysis (BEA) released its initial estimate for the third quarter of 2025 yesterday, December 23, 2025. 

Headline: Stronger Than Expected Growth

Real GDP increased at an annual rate of 4.3% in Q3 2025. 

This figure represents a significant acceleration from the 3.8% growth seen in the second quarter. The release of this data was delayed by nearly two months due to the recent government shutdown, replacing the advance estimate originally scheduled for late October. 

Key Drivers of Growth

The 4.3% expansion was primarily driven by robust consumer activity and government expenditure, which offset weaknesses in business investment. 

• Consumer Spending (+3.5%): Household spending remains the engine of the economy, accelerating from 2.5% in the previous quarter. Growth was led by spending on services (healthcare, international travel) and goods (recreational vehicles). 

• Exports (+8.8%): Exports rebounded sharply after contracting in Q2, contributing significantly to the headline number. 

• **Government Spending (+2.2%): Federal defense spending and state/local expenditures both increased, recovering from a slight contraction in Q2. 

• Private Investment (-0.3%): This remained a drag on the economy, primarily due to declines in residential (housing) and non-residential structures. However, this decline was much less severe than the 13.8% drop seen in Q2.

Inflation & Prices

While growth was strong, inflation measures in the report were higher than the Federal Reserve's target, potentially complicating future interest rate decisions. 

• PCE Price Index: Increased 2.8% (up from 2.1% in Q2). 

• Core PCE (excluding food/energy): Rose 2.9% (up from 2.6% in Q2). 

Outlook for Q4 2025

Looking ahead, the economy appears to be moderating but remaining positive.

• GDPNow Forecast: The Federal Reserve Bank of Atlanta's "GDPNow" model currently estimates 3.0% growth for Q4 2025. 

• Next Release: The next GDP update is scheduled for January 22, 2026.#USGDPUpdate $USDC $USDT