What's happened
US GDP rose at an annualized rate of 4.3% in Q3, driven by consumer spending and exports, despite persistent inflation above the Fed's target. The economy remains resilient amid global uncertainties and ongoing monetary policy adjustments.
What's behind the headline?
The recent GDP figures reveal a resilient US economy that defies expectations of a slowdown. The 4.3% growth in Q3, driven by increased consumer spending and exports, indicates underlying strength. However, inflation remains stubbornly high at 2.8%, complicating the Federal Reserve's policy stance. The Fed's rate cuts, totaling three in 2025, aim to balance inflation control with labor market stability, which shows signs of weakening with rising unemployment and slower job creation. The divergence between strong GDP growth and a fragile labor market suggests that the economy's momentum may be unsustainable without further policy adjustments. The recent data, delayed by the government shutdown, underscores the ongoing uncertainty and the challenge for policymakers to navigate inflation, growth, and employment simultaneously. This resilience will likely persist into early 2026, but persistent inflation and a cautious Fed suggest a potential slowdown ahead, especially if inflation remains above target and the labor market continues to weaken.
What the papers say
The Independent reports that GDP growth in Q3 reached 4.3%, driven by consumer spending and exports, but inflation remains above the Fed's 2% target. The Guardian highlights the surprising strength of the economy amid political and trade uncertainties, noting that the growth defied expectations of a slowdown. AP News emphasizes the delayed data due to the government shutdown and the ongoing debate over interest rate policies, with analysts warning of potential slowdown risks. All sources agree that despite robust growth, inflation and labor market signals point to cautious outlooks for 2026, with the Fed likely to maintain a careful approach to interest rates.
How we got here
The US economy experienced a brief contraction in Q1 2025 due to import surges ahead of tariffs, but rebounded quickly. Consumer spending and exports fueled growth, while inflation remained above the Fed's 2% target. The government shutdown delayed key economic data, complicating policy decisions.
Go deeper
Common question
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How is the US economy performing in late 2025?
The US economy has shown strong growth in 2025, with a 3.8% increase in GDP in Q3. Despite this growth, inflation remains above the Federal Reserve's target, and the labor market shows signs of slowing down. Many are wondering what this means for consumers, interest rates, and the future of the economy. Below, we answer some of the most common questions about the current state of the US economy and what to expect moving forward.
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The Federal Reserve System is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a series of financial panics led to the desire for central control of the m