Trump’s Economy Grows 4.3 Percent, Dashing Economists’ Lower Expectations | The American Spectator

The U.S. economy grew this summer at a surprisingly strong 4.3 percent annual rate in the third quarter, the most rapid expansion in two years, as corporate profits and consumer spending, as well as exports, all increased.

The Commerce Department reported Tuesday that the U.S. gross domestic product (GDP) — the government’s official economic scorecard — rose at a seasonally and inflation-adjusted 4.3 percent annual rate in the third quarter. The report on the July through September period was delayed due to the government shutdown.

“Today’s blockbuster, expectation-smashing GDP report is the latest proof that President Trump’s America First trade and economic agenda continues to turn the page on the Biden economic disaster: American consumers are spending, and American exports are surging,” White House spokesman Kush Desai said.

Gross domestic product is a broad measure of the goods and services produced across the economy. Economists had expected the economy to grow at only a 3.2 percent annual rate after the second quarter’s 3.8 percent growth. (RELATED: Trump Proved ‘Experts’ Wrong About Tariffs)

Trump’s tariffs were supposed to increase inflation and thus dampen consumer spending. Just the converse occurred. (RELATED: The Trump Administration’s Agenda Is on a Crash Course With… Itself)

Prior to the inflation adjustment, the economy grew at an 8.2 percent rate.

“If the economy keeps producing at this level, then there isn’t as much need to worry about a slowing economy,” said Chris Zaccarelli, chief investment officer for Northlight Asset Management, adding that inflation (although currently subdued) could return as the greatest concern about the economy. (RELATED: Economists Complain About Trump’s New Inflation Figures)

Real final sales to private domestic purchasers, a slice of GDP that some economists view as a clearer measure of the health of the private sector, grew at a 3.0 percent annual rate, up from the second quarter. This suggests that demand from consumers and businesses remained strong and gathered momentum over the summer.

Consumer spending, which accounts for about 70 percent of U.S. economic activity, grew much faster than expected, expanding at a seasonally and inflation-adjusted annual rate of 3.5 percent. That’s up from 2.5 percent in the second quarter and above the 2.7 percent expected.

Another consistent driver in the U.S. economy, spending on artificial intelligence, was also evident in the latest data.

Investment in intellectual property, the category that covers AI, grew 5.4 percent in the third quarter, following an even bigger jump of 15 percent in the second quarter. That figure was 6.5 percent in the first quarter.

Donald Trump’s trade policies appear to have added to growth in the third quarter, as exports rose 8.8 percent while imports fell 4.7 percent. (Exports add to GDP while imports, because they represent foreign production, are subtracted.)

Government spending added 0.39 points to growth.

Corporate profits soared in the third quarter, rising at a 17.9 percent annual rate after adjusting for inventory pricing effects and depreciation. The sector helped drive growth, skyrocketing by more than $166 billion, up from a $6.8 billion increase during the previous quarter.

The main drag was private inventory investment, which subtracted 0.22 points as wholesalers and manufacturers drew down stocks. This is likely to reverse in future quarters, adding to growth in future quarters. Fixed investment grew only 1.0 percent, with residential investment (offices and warehouses) declining 5.1 percent, reflecting the sluggish housing market. However, that decline was much less than the 13.8 percent slide in the second quarter.

Outside of the first quarter, when the economy shrank for the first time in three years as companies rushed to import goods ahead of President Donald Trump’s tariff rollout, the U.S. economy has continued to expand at a healthy rate. That’s despite much higher borrowing rates the Fed imposed in 2022 and 2023 in its drive to curb the inflation that surged as the United States bounced back with unexpected strength from the brief but devastating COVID recession of 2020.

Though inflation remains only marginally above the Fed’s 2 percent target, the central bank cut its benchmark lending rate three times in a row to close out 2025, mostly out of concern for a job market that has steadily lost momentum since spring.

Tuesday’s report is a sign that the White House is on its way toward meeting some of the lofty projections Trump’s allies had set when the president returned to the White House earlier this year. Business investments in equipment and intellectual property — which includes software and technological research — both continued to climb during the last quarter.

Note of caution: While the economy’s expansion has surpassed expectations in consecutive quarters, those gains have failed to reverse an uptick in the jobless rate. The Conference Board’s closely watched consumer confidence gauge dipped on Tuesday, a sign that the public’s view of the labor market and future earnings has dimmed somewhat. The U.S. could be experiencing what economist Mohamed El-Erian has described as the decoupling of GDP growth from employment.

In economics, that means more output with the same or fewer workers — great for business, not so for workers.

Investments in artificial intelligence — along with the wealth that was generated by an AI-related stock market bull run — have been major economic drivers this year. And the arrival of that technology is diminishing “labor” as an engine of economic growth. If workers don’t benefit from the upside, that could make GDP as an indicator of prosperity less relevant in the domestic political landscape moving forward.

The decoupling of GDP from the employment issue could be significant in the 2026 midterms and beyond.

Still, given the predictable negative press surrounding Trump’s economic agenda, administration officials are treating the GDP report as a sign that the president’s plans are indeed working.

The GDP figure shows strength where economists should want to see it — consumer spending, capital expenditures, corporate profits, and, of course, a smaller trade gap.

President Trump’s America First tariff agenda continues to exasperate his critics, defying mainstream economists and legacy journalists. It seems they will only be happy when (under the auspices of this president) the data says America is not doing well. And we’re nowhere near that.

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