Updated December 23, 2025 at 5:21 PM EST
The U.S. economy grew robustly in July, August and September, powered by steady consumer spending, especially on health care.
The gross domestic product — the broadest measure of the nation's economic activity — grew at an annual rate of 4.3% in the third quarter, much faster than the 3.8% expansion seen between April and June, according to the Commerce Department on Tuesday.
Growth has picked up from the early months of 2025, when the U.S. economy actually shrank at an annual rate of 0.6% as President Trump prepared sweeping global tariffs.
The latest figures are already quite dated. Tuesday's report was originally due in late October but was disrupted by the historic government shutdown. And it now comes as polling increasingly finds Americans glum on President Trump's handling of the economy and the high cost of living.
Third-quarter data shows business and residential investment declining. Spending by state and local governments rose. The impacts of trade swings were more mixed in the latest report, compared to earlier in the year: imports of goods declined, while exports increased. Imports get subtracted from the government's measure of domestic economic activity, so they tend to depress GDP.
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Americans continued to spend but are turning more cautious
Spending by consumers, who remain the key engine of the U.S. economy, increased in the third quarter, according to the Commerce report. People spent more on hospital and nursing home services, on prescription drugs and on "information processing equipment," such as computer hardware, presumably as part of the AI boom.
Consumer spending has been resilient for much of the year; however, in recent polling, more and more people today are saying they're feeling down about their financial prospects. A new report on consumer confidence from the Conference Board on Tuesday found sentiment declining for the fifth month in a row, as Americans worry about inflation, the political environment and the future of the labor market.
Tuesday's GDP report also showed disposable personal income was flat in the quarter, as inflation continued to eat away at Americans' wages.
'We're skating on past success because consumers have enjoyed a couple of consecutive years of strong wage gains," says Michael Zdinak, an economist with S&P Global Market Intelligence. "Today's report shows that demand is strong and consumers are willing to spend money — if they're didn't have this sword of Damocles hanging over their head that, you know, AI is coming from their jobs or that mass layoffs are just right around the corner," he adds.
On average, workers' wages have been growing faster than prices. But those wage gains have slowed in recent months as the softening job market has chipped away at workers' bargaining power for higher pay. Wealthier shoppers have been propping up much of U.S. spending at stores and restaurants.
Inflation has been cooling off notably, with consumer prices rising a modest 2.7% in November from a year earlier. Some food items have continued to drop in price, but not enough to offset the growing big costs, like rent, electricity and health insurance.
The latest NPR/PBS News/Marist poll has found that only 36% of Americans approve of President Trump's handling of the economy, his worst mark in the six years that Marist has been asking the question.
NPR's Scott Horsley contributed to this report.
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