President Donald Trump smiles from the field before the Army-Navy football game at M&T Bank Stadium on Dec. 13 in Baltimore. | Patrick Smith/Getty Images
Corporate profits helped drive growth, skyrocketing by more than $166 billion, up from a $6.8 billion increase during the previous quarter.
The U.S. economy expanded at an annual rate of 4.3 percent during the third quarter, blowing past the expectations of economists and delivering a boost to President Donald Trump as he seeks to reverse his flagging approval ratings.
The Commerce Department’s initial estimate of gross domestic product — which was significantly delayed due to the government shutdown — reported sharp increases in consumer spending, government investment and exports. Americans spent more on health care, recreational goods and nondurable products like prescription drugs.
Corporate profits also skyrocketed by more than $166 billion, up from the $6.8 billion increase reported during the previous quarter. The White House’s Council of Economic Advisers attributed the blowout report on GDP — which measures the value of goods and services produced in the U.S. — to an expansion of the private sector. And Trump’s tariffs are continuing to push down imports, which also lifted the growth estimate.
Secretary Lutnick on the amazing 4.3% GDP growth:
“We’ve got more jobs, lower energy costs, and lower interest rates coming. This is the Golden Age ahead. 4.3% this quarter means Americans, on average, are making more money—more money in their pocketbooks. And that makes for a… pic.twitter.com/WNHHuBULrl
— U.S. Commerce Dept. (@CommerceGov) December 24, 2025
“The SUCCESS is due to Good Government, and TARIFFS. Consumer spending is STRONG, Net Exports are WAY UP, Imports and Trade Deficits are WAY DOWN, and there is NO INFLATION! Because of my Tax Bill (THE GREAT BIG BEAUTIFUL BILL) and TARIFFS, INVESTMENT IS SETTING RECORDS,” Trump posted on Truth Social.
Trump and top administration officials say their policies will unlock the U.S. economy, ushering in a new golden age that will boost wages and generate jobs. Tuesday’s report is a sign that the White House is on its way toward meeting some of the lofty projections Trump’s allies had set when the president returned to the White House earlier this year. Business investments in equipment and intellectual property — which includes software and technological research — both continued to climb during the last quarter.
While the economy’s expansion has surpassed expectations in consecutive quarters, those gains have failed to reverse an uptick in the jobless rate or translate to strong payroll gains. The Conference Board’s closely watched consumer confidence gauge dipped on Tuesday, a sign that the public’s view of the labor market and future earnings has darkened. The U.S. could be experiencing what economist Mohamed El-Erian has described as an “unsettling phenomenon”: the decoupling of GDP growth from employment.
That means “more output with the same or fewer workers,” El-Erian, a professor at the Wharton School and chief economic adviser at Allianz, said in an interview prior to the report.
Investments in artificial intelligence — along with the wealth that was generated by an AI-related stock market bull run — have been major economic drivers this year. And the arrival of that technology is diminishing “labor intensity” as an engine of economic growth, El-Erian said. If workers aren’t benefiting from the upside, that could make GDP far less salient to the U.S. political landscape moving forward.
“The increasing decoupling of GDP from employment is such a consequential issue,” El-Erian said. “It’s a big story economically, socially and politically — it will be huge in six- to 12-months’ time — but it’s not being paid enough attention to now.”
A soft labor market could weigh on consumer spending moving forward. While certain private sector measurements of spending through the holiday season have been positive, the Census Bureau’s delayed estimate of October retail sales showed little growth. Notably, Commerce reported that personal disposable income growth had dropped to nil in the July-September quarter.
There are already signs that “the tide has turned” in recent months, Oliver Allen of Pantheon Macroeconomics wrote in a research note on Tuesday.
“The weak labor market, stagnant real incomes, and exhaustion of pandemic-era excess savings all seem finally to be catching up with households,” he wrote. “The federal shutdown and ongoing drag from the DOGE cuts likely will weigh heavily on government spending this quarter. Continued tariff-related uncertainty and still-tight monetary policy also suggest that investment spending outside AI-related sectors probably will remain soft in the near term.”
What’s more, while the economy has expanded, prices have continued to rise for consumers. The Commerce Department reported that the Federal Reserve’s preferred inflation gauge rose by 2.8 percent from July to September, compared with just 2.1 percent the previous quarter.
That has hurt Trump’s standing with voters. Just 33 percent of Americans approve of his economic stewardship, according to a Reuters/Ipsos poll. Republicans were trounced in off-year elections in New Jersey, Virginia and Georgia last month, and the administration has been trying to refocus the president’s messaging on affordability and cost-of-living issues.
Still, given the negative headlines around Trump’s economic agenda, administration officials are celebrating the eye-popping GDP report as a sign that the president’s plans are working.
“It’s a good number because it’s where you want to see the strength,” Joseph Lavorgna, a counselor to Treasury Secretary Scott Bessent, told POLITICO shortly after the report was released. “You want to see the strength in consumer spending, number one. And number two, the capex [capital expenditures] numbers still look pretty solid. And then, of course, there’s the narrower trade gap.”
