The economy did better in the third quarter of 2025 than even the government thought it did.
Bolstered by strong consumer spending, the U.S. economy grew at the fastest pace in two years from July through September, according to figures released by the Commerce Department. the government said Thursday.
America’s gross domestic product rose at a 4.4% annual pace in the third quarter, the Commerce Department reported Thursday, up from 3.8% in the April-June quarter and from the 4.3% growth the department initially estimated. The economy hasn’t grown faster since third-quarter 2023.
According to a report from The Associated Press, consumer spending, which accounts for 70% of U.S. GDP, grew at a healthy 3.5% pace. Spending on services such as healthcare was up 3.6% versus a 3% uptick on goods spending. A surge in exports and a drop in imports also contributed to robust third-quarter growth, according to the AP report.
Business investment (excluding homebuilding) rose at a 3.2% clip, partly reflecting bets on artificial intelligence.
Despite the strong growth numbers, many Americans are dissatisfied with the state of the economy and especially the high cost of living. The AP reports the gap between how consumers say they feel and the strong spending numbers might reflect what is known as a “K-shaped economy.” Wealthier Americans are spending more, their incomes boosted by market gains and growing investments, while lower-income households struggle with stagnant pay and high prices.
The job market also looks a lot weaker than the overall economy, according to the report. Employers have added 28,000 jobs a month since March. In the 2021-2023 hiring boom that followed Covid-19 lockdowns, they were creating 400,000 jobs a month. It hasn’t yet seemed to affect the unemployment rate, which remains at 4.4%.
“The United States is experiencing a jobless boom where strong growth is powered by AI investments and consumption by wealthier families, but there is almost no hiring,” Heather Long, chief economist at Navy Federal Credit Union, told the AP. “It’s an uneasy situation for many middle-class families. One of the big questions for 2026 is whether the middle class will start to feel the uplift from the boom.”
