A report released by the Commerce Department on Tuesday showed the U.S. economy grew by much more than expected in the third quarter of 2025.
The Commerce Department said real gross domestic product spiked by 4.3 percent in the third quarter after surging by 3.8 percent in the second quarter. Economists had expected GDP to jump by 3.3 percent.
The stronger than expected GDP growth in the third quarter reflected increases in consumer spending, exports, and government spending that were partly offset by a decrease in investment.
The report also said the acceleration in the pace of GDP growth compared to the previous quarter reflected a smaller decrease in investment, an acceleration in consumer spending, and upturns in exports and government spending.
On the inflation front, the Commerce Department said its personal consumption expenditures (PCE) price index surged by 2.8 percent in the third quarter jumping by 2.1 percent in the second quarter.
Excluding food and energy prices, the core PCE price index spiked by 2.9 percent in the third quarter after shooting up by 2.6 percent in the second quarter.
“These data, along with the recently released employment and CPI metrics, show an economy that is growing, but unevenly, and one where inflation is still running well above the FOMC’s target,” said Mortgage Bankers Association SVP and Chief Economist Mike Fratanton.
He added, “We forecast that the FOMC will be on hold at its January meeting, and will likely cut rates just once more next year.”
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