#USGDPUpdate
The latest U.S. GDP figures indicate the economy ended Q3 2025 with more strength than many anticipated, as real GDP increased at a 4.3% annual rate according to the BEA’s initial estimate.
The composition of this growth is important. Consumer spending, exports, and government spending drove the expansion. Investment, however, decreased, as did imports. A drop in imports can mechanically boost the headline GDP number. So, while demand remained strong, the underlying drivers (investment) are not as positive as the overall figure suggests.
Inflation indicators within the report also strengthened. The gross domestic purchases price index climbed 3.4%, while PCE inflation stood at 2.8% and core PCE (excluding food and energy) was 2.9% in Q3. This mix of strong growth and persistent prices maintains the possibility of a "soft landing," but it also makes future policy decisions more dependent on upcoming inflation data.
Looking ahead, the Atlanta Fed’s GDPNow model forecasts approximately 3.0% seasonally adjusted annual rate (SAAR) growth for Q4 2025, as of December 23.
Federal Reserve Bank of Atlanta +1
The key question now is whether this growth rate will continue after inventories are adjusted and temporary factors subside, or if growth will return to a more normal level as interest rates and prices continue to impact real purchasing power.