The latest data on U.S. gross domestic product indicates that the economy finished the third quarter of 2025 with strength that exceeded many expectations, with real GDP growing at an annual rate of 4.3% according to preliminary estimates from the Bureau of Economic Analysis.
The composition of this growth is important. Consumer spending, exports, and government spending were the driving factors behind this expansion. In contrast, investment and imports declined. A decrease in imports can automatically raise the overall GDP figure. Thus, while demand remained strong, the underlying driving factors (investment) are not as positive as the overall figure suggests.
Inflation indicators included in the report also improved. The overall personal consumption expenditures price index rose by 3.4%, while the inflation rate for personal consumption expenditures stood at 2.8%, and the core inflation rate for personal consumption expenditures (excluding food and energy) was 2.9% in the third quarter. This combination of strong growth and stable prices maintains the possibility of a "soft landing," but also makes future policy decisions more reliant on upcoming inflation data.
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