US economic growth beats forecasts in Q3
Newsflash: US economic growth accelerated in the third quarter of this year, to the fastest rate in two years.
US real gross domestic product (GDP) increased at an annualised rate of 4.3% in the July-September period, the US Bureau of Economic Analysis reports, up from 3.8% in April-June.
That beats Wall Street forecasts that growth would slow to 3.3%, and is the fastest growth recorded for the US economy since the third quarter of 2023.
A chart showing US economic growth Photograph: BEA
Annualised growth of 4.3% is the equivalent of quarterly growth of almost 1.1%, much faster than the UK which only grew by 0.1% in Q3.
The increase in real GDP in the third quarter was due to increases in consumer spending, exports, and government spending that were partly offset by a decrease in investment.
Imports, which are a subtraction in the calculation of GDP, decreased, the BEA explains.
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Updated at 08.44 EST
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Wall Street has opened cautiously as traders digest today’s GDP report.
The Dow Jones industrial average, of 30 large US companies, has dipped by 20 points or 0.05% to 48,342 points. Amazon (+1.3%) are the top riser, followed by UnitedHealth group (+0.64%)
The broader S&P 500 index is up 0.13%.
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Some US goverment borrowing costs have risen after economic growth beat forecasts in the third quarter of the year.
Today’s better-than-expected GDP report may take some pressure off the US Federal Reserve to cut US interest rates as quickly as some in the markets had expected.
The yield (or interest rate) on two-year Treasury bonds is up 5 basis points to 3.55%, while 10-year bonds are up 3.5 basis points at 4.2%
Q3 GDP came in strong at an annualized +4.3%. Consumer spending (+3.5%), exports (+8.8%), and imports (-4.7%) were the big contributors. Yields up on the stronger set of data 2-3bps in response. pic.twitter.com/333xI9vor6
— Liz Thomas (@LizThomasStrat) December 23, 2025
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Analysis: strong consumption driving US growth
Here is analysis of today’s UK GDP report from Heather Long, the chief economist at Navy Federal Credit Union.
“This is the best quarterly economic growth in two years (since Q3 2023). The main drivers of the growth were strong consumption, unusually low imports and a little bit more government spending.
What’s telling is that the AI boom did not play a big role in Q3 growth. This was a quarter when consumers returned to being the key driver of the U.S. economy. While the trade distortions did play a role, real final sales to domestic purchasers still came in at a robust 3%, a sign that demand remains healthy even in the midst of so many headwinds.
Consumers did pull back a bit on autos and household furnishings, but they continue to spend across almost every category, including discretionary items such as recreational goods. This bodes well for 2026. If the economy can avoid widespread layoffs, most American consumers can keep spending.”
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Updated at 09.14 EST
Today’s US economic data are distorted, somewhat, by the trade disruption caused by Donald Trump’s tariffs.
That’s because exports have a positive impact on GDP, while imports detract from it.
The Trump trade war caused a surge of imports in Q1 as businesses tried to beat the ‘Liberation Day’ tariffs in early April, followed by a slump once those tariffs were in (and also once warehouses were full of goods from overseas!).
Exports, in contrast, were subued in Q1 and Q2, but picked up sharply in Q3.
Navy Federal Credit Union economist Heather Long has posted the details:
Q3 GDP of 4.3% was boosted over a percentage point by the weird trade situation. (See yellow boxes below). Artificially low imports and “high” exports did make GDP look better.
But keep in mind: Consumption was strong in Q3 at +3.5%. (see green box below)
Bottom line: This a… pic.twitter.com/AMgpZObeVE
— Heather Long (@byHeatherLong) December 23, 2025Share
Updated at 09.13 EST
AI boom ‘may have taken a step backwards’
Paul Ashworth, chief North America economist at Capital Economics, has spotted that investment in artificial intelligence may have slowed in Q3.
Ashworth explains:
Third-quarter consumption growth was 3.5%, up from 2.5% in the second quarter, with a surge in health care services spending driving a 3.7% gain in services consumption. Indeed, health care services spending alone added 0.8% points to overall GDP growth.
Somewhat disappointingly, however, business investment growth slowed to only 2.8% annualised, with IPP and equipment investment growth both slowing to 5.4% and, despite the data centre mania, investment in non-residential structures contracted at a 6.3% pace. At face value, that suggests the AI boom might have taken a step backwards, after driving GDP growth in the first half of the year.
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Updated at 09.14 EST
Today’s US GDP report shows that consumer spending on goods and services rose in the July-September quarter.
Within services, the leading contributors were health care and other services. Within goods, the leading contributors were recreational goods and vehicles as well as other nondurable goods., the BEA says.
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US economic growth beats forecasts in Q3
Newsflash: US economic growth accelerated in the third quarter of this year, to the fastest rate in two years.
US real gross domestic product (GDP) increased at an annualised rate of 4.3% in the July-September period, the US Bureau of Economic Analysis reports, up from 3.8% in April-June.
That beats Wall Street forecasts that growth would slow to 3.3%, and is the fastest growth recorded for the US economy since the third quarter of 2023.
A chart showing US economic growth Photograph: BEA
Annualised growth of 4.3% is the equivalent of quarterly growth of almost 1.1%, much faster than the UK which only grew by 0.1% in Q3.
The increase in real GDP in the third quarter was due to increases in consumer spending, exports, and government spending that were partly offset by a decrease in investment.
Imports, which are a subtraction in the calculation of GDP, decreased, the BEA explains.
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Updated at 08.44 EST
The copper price rally is also being fuelled by fears that President Donald Trump’s administration could impose additional import tariffs on copper next year.
Bloomberg says the possibility that Trump will place tariffs on the metal has been a central factor driving prices higher, with a surge in US imports through the year thrusting manufacturers elsewhere into a bidding war to keep hold of supplies.
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The US dollar is its lowest in 11 weeks against a basket of currencies, with the greenback hitting a three-month low against the Swiss francs and the Australian dollar today, as well as the pound.
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Copper price hits record high over $12,000/ton
The weakness in the US dollar is helping to push the price of copper to a record high today.
Copper hit a fresh all-time high above $12,000 a ton in London trading, with traders pointing to a combination of supply disruptions and a bullish demand outlook.
Demand for copper, which is widely used in infrastructure and energy networks, has been rising this year amid strong demand for AI datecentres.
Supply of copper has been disrupted by the fatal mudslide at the Grasberg copper and gold mine in Indonesia, which forced its owner, US miner Freeport-McMoRan, to say it was unable to fulfil contracts to customers.
Trevor Yates, senior investment analyst at Global X ETFs, predict copper will keep rising next year:
Looking ahead to 2026, we expect the supportive supply-demand fundamentals to persist while the more favorable macro backdrop should further bolster the copper market.
The combination of a more dovish Federal Reserve, a positive fiscal impulse, and the potential for U.S. dollar weakness could help spark a modest recovery in traditional cyclical demand, enough, in our view, to push the market into deficit. In this environment, miners remain particularly well positioned, historically offering greater leverage to rising copper prices.”
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Pound strongest against US dollar since 1 October
The pound has climbed to its highest level against a weakening dollar in almost three months.
Sterling is up almost half a cent this morning at $1.351, the highest level since 1 October.
The dollar is sliding on the foreign exchange markets as investors anticipate cuts to US interest rates in 2026, and probably more than America’s central bank, the Federal Reserve, expects.
Charalampos Pissouros, senior market analyst at Trading Point, says:
Despite the Fed projecting only one quarter-point reduction for 2026, market participants remain convinced that around 60bps worth of cuts are warranted for next year.
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