Strong growth, weak sentiment in US

Dec 24, 2025, 08:57 am

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A view of the Lincoln Road shopping district in Miami, Florida, on Dec. 23, as U.S. economic data showed a sharp jump in third-quarter GDP growth. / AFP·Yonhap

U.S. economic growth surged to its strongest pace in two years in the third quarter, driven by robust consumer spending and exports, even as consumer sentiment cooled sharply, underscoring a growing gap between headline data and how households perceive the economy.

According to the Bureau of Economic Analysis, real gross domestic product expanded at an annualized rate of 4.3% in the third quarter, far exceeding the market consensus of 3.2%. It marked the fastest growth since the third quarter of 2023, when GDP rose 4.7%.

The data release had been delayed by more than a month due to the longest federal government shutdown in U.S. history. Despite concerns over tariffs and cooling employment, the figures suggested that American consumers continued to spend.

The United States reports GDP as an annualized quarter-on-quarter growth rate. After contracting 0.6% in the first quarter amid a pre-tariff surge in imports, the economy rebounded 3.8% in the second quarter before accelerating further in the third.

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Changes in U.S. real gross domestic product (GDP) growth rates from the second quarter of 2024 to the third quarter of 2025. / Source: U.S. Bureau of Economic Analysis (BEA)

Consumption and exports were the key engines of growth. Personal consumption expenditures rose at a 3.5% annualized pace, contributing 2.39 percentage points to overall growth, up from a 2.5% increase in the previous quarter. Net exports added 1.59 percentage points, as exports jumped 8.8% while imports fell 4.7%. Government spending also increased 2.2%, contributing 0.39 percentage points.

The Wall Street Journal described the contribution from trade as rare in the post-pandemic era. The New York Times noted that while strong consumer spending helped offset slowdown fears, rising household credit and the risk of renewed inflation remain potential vulnerabilities. The Financial Times said the data highlighted the resilience of the U.S. economy even under high interest rates, while cautioning that consumer momentum could fade.

Underlying demand indicators were also solid. Final sales to private domestic purchasers—a measure excluding inventories, trade, and government spending—rose 3.0%, signaling firm fundamental demand. By contrast, private investment slipped 0.3%, reflecting a normalization after large inventory swings earlier in the year linked to anticipated tariff hikes.

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Summary of key U.S. economic indicators for the third quarter of 2025

Despite the upbeat growth figures, consumer confidence deteriorated. The Conference Board reported that its Consumer Confidence Index fell to 89.1 in December from 92.9 in November, below market expectations. The present situation index plunged 9.5 points to 116.8, its lowest level since February 2021, while the expectations index remained below the recession-warning threshold of 80 for an 11th consecutive month.

Reuters described the divergence as a growing disconnect between strong economic indicators and subdued consumer sentiment.

President Donald Trump seized on the strong GDP data to renew pressure on the Federal Reserve to cut interest rates. In a post on his social media platform Truth Social, Trump argued that markets were falling on good news because investors feared imminent rate hikes to curb “potential” inflation.

“Strong markets—even phenomenal markets—do not cause inflation,” Trump wrote, adding that “stupidity” does. His comments intensified an already heated debate over whether the Fed should pivot toward rate cuts despite lingering inflation risks and weakening consumer confidence.

#US GDP #economic growth #consumer sentiment #Donald Trump #Federal Reserve