Third-Quarter GDP Grew at an Annual 4.3% Rate, But With a Catch

MARY CHASTAIN DEC 23, 2025 4:00 PM

It sounds fantastic, but the real news is in the details.

The Bureau of Economic Analysis (BEA) released its third-quarter real gross domestic product report.

So-called experts predicted 3.3%.

The GDP grew at an annual rate of 4.3% in the third quarter, which covers July, August, and September.

“The increase in real GDP in the third quarter reflected increases in consumer spending, exports, and government spending that were partly offset by a decrease in investment,” according to the BEA. “Imports, which are a subtraction in the calculation of GDP, decreased.”

I don’t like the fact that there was a decrease in investments.

Here’s how it happened:

• Personal Consumption rose by a whopping 2.39%, up from 1.68% in Q2
• Fixed Investment moderated, rising by 0.19%, vs 0.77% in Q2. Once again, this is mostly data centers
• Change in private inventories declined by 0.22%, a moderation from the -3.44% drop in Q2, and to be expected as the trade aberration from the trade war moderate
• Net trade (exports less imports) also normalized and after a surge of 4.83%, the increase was a more modest 1.59%, driven by positive contributions from both exports (0.67%) and imports (0.92%).
• Finally, government contributed 0.39% to Q3 GDP after subtracting from US growth in each of the previous two quarters of 2024.

People’s spending “grew at an annual rate of 3.5% in the third quarter, picking up from 2.5% in the previous quarter.”

Great! People are spending money. That’s good, right? How about disposable income?

Well, let’s look at what people are buying.

Health care blew out every other category, increasing 0.76%.

At least people didn’t pay much more on housing, utilities, gas, and other energy services.

Again, you have to get past the headlines and look at the details.

Those details show the real story.

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