BOOM! US Economy Grows By Big 4.3% In Third Quarter

4.3% is the annualized growth rate. What "annualized" means is "if we took this quarter's actual growth rate and multiplied it by four to find the growth we could expect over an entire year, if it continued."

The actual growth rate for the quarter is then something like 1.08%, but don't worry about that, because we always talk about the annualized growth rate. There is no mathematical manipulation going on to make the number seem bigger than it is. This is how we always measure it.

Just to know how to evaluate GDP growth, here's a quick but Expert primer, because I'm an Expert in literally anything I talk about:

Less than 0% (negative "growth"): the economy shrank. Recessionary.

0%: No growth, and pretty recessionary, because the population always grows. Zero growth thus means that everyone lost a little.

1%: Weak, barely perceptible growth. Either a poor economy or maybe even one about to fall into recession.

2%: Growth, and not really a sign of a recession, but sluggish and unimpressive growth that no one will brag about. Also nothing to panic about. Very meh. To put it terms you can understand, if we were using the Hustler boner meter to rate the economy rather than pornography, it rates one erect penis and one droopy one (out of a possible four erect penises, obviously). It's the "garrett" of economies, then. At this level, the economy is a vaguely unwelcome presence that won't shut up about its bike but you just shrug and just think about the blissful oblivion of death.

3%: Solid growth. No one can dispute the economy is growing. No one would dispute that this is a good solid economy. People's moods will naturally be a little elevated during a period of this level of growth. Think "Jack Straw smoking a bone while steering his yacht with his bare foot and listening to a 15 minute double drum solo." I know that sounds like the Holocaust, but I mean, think about this from Jack Straw's perspective. He likes 15 minute double drum solos because he was raised wrong and don't know no better.

4%: Very high growth. Starting to get into actual "BOOM" territory, if sustained, if it's not just a one-quarter wonder. Think: Me riding down the street on my Vespa, carrying my J. Crew messenger bag, looking at the world with optimism and cheer and thinking of all the vertical surfaces I can stick shelves on.

5%: Outstanding growth. This level is rarely seen and means the economy is running on all 12 cylinders. (Yes, 12 cylinders, it's now a sportscar.) Sustained 5% growth means Golden Times. Think "Sydney Sweeney wearing a low-cut top with beads of golden honey sweat trickling down between her breasts as she washes and details your Camaro." (Artist's conception.)

Clinton had some of this during the internet bubble and the deficit actually fell (despite his best efforts to increase it) because tax takings were so large and welfare spending fell.

This level of extraordinary growth can't be sustained forever, maybe just a year or two. This is about the best level of growth you can realistically hope for.

You occasionally see 6% or 7% quarters -- or even higher -- but usually only in like Latin American countries when they recover from one of their frequent recessions/depressions, or China up to about ten years ago. When it happens in America, it's a one-quarter wonder. I think GWB had one 7.2% quarter but I think that was like six months after the economic apocalypse of 9/11 -- so a one-quarter wonder, with the American economy rebounding back from a deep shock-recession, like Latin American countries do with their always-volatile economies.

Apart from some weird one-off circumstances, like recovering from 9/11, advanced, stable economies almost never grow in a sustained way at these levels.

So, the 4.3% growth is very high and not too far away from "It's Morning in America again."

And it's not even a one-quarter wonder -- the last quarter showed strong 3.8% growth. It looks like it's real and building.

Is the economic turn we desperately need for 2026 and 2028, too, finally here?

Let's hope. It looks good at the moment.

Ed Morrissey:

The US economy grew 4.3% in real gross domestic product in Q3 (annualized), the best quarter of growth in the past two years. It exceeds the 3.8% growth in Q2 that had largely been seen as driven by rebalancing of the trade deficit. It's the first BEA analysis of overall economic activity since September, thanks to the Schumer Shutdown:

Real gross domestic product (GDP) increased at an annual rate of 4.3 percent in the third quarter of 2025 (July, August, and September), according to the initial estimate released by the U.S. Bureau of Economic Analysis. In the second quarter, real GDP increased 3.8 percent.

Due to the recent government shutdown, this initial report for the third quarter of 2025 replaces the release of the advance estimate originally scheduled for October 30 and the second estimate originally scheduled for November 26.

The increase in real GDP in the third quarter reflected 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.

Just to clarify: "real GDP" already accounts for inflation. This is growth above the rate of inflation, annualized for comparative purposes. The last six months of economic activity has shown a combined growth of 4.0% or a bit better, which is a fantastic momentum by anyone's reckoning.

Previous growth was explained away by experts by claiming that the apparent growth was mostly due to technical factors due to Trump's tariffs. (Imports reduce GDP, so reducing them "increases" GDP, at least on paper.)

But Ed Morrissey explains that the new numbers appear to be unaffected by changes in tariff policy. See his post for that. It's dangerously close to math and you know that we do not do that here.

He also notes that the WSJ breaks out my favorite leftwing buzzword: "Unexpectedly."

The U.S. economy grew at an unexpectedly robust pace in the third quarter, powered by strong consumer spending.

Gross domestic product, the value of all goods and services produced across the economy, rose at a seasonally and inflation-adjusted 4.3% annual rate for the July through September quarter, the Commerce Department said Tuesday in a shutdown-delayed report.

It was the highest growth rate in two years, and reflected robust spending by consumers on services like healthcare as well as spending on recreational vehicles. Growth picked up from 3.8% in the previous quarter, and beat the 3.2% forecast among economists polled by The Wall Street Journal.

There is a chance this number will be revised down after a time. "Big numbers" are often revised back to be closer to the mean (that is, back to a more moderate level, whether up or down).

But even if it's revised down a touch, it's still a big number.

And it could also be revised up, of course. The leftwing bureaucrats in the BEA always seem to produce bigger initial numbers for Democrats and worse numbers for Republicans than time eventually reveals to be the accurate numbers.

posted by Ace at 12:12 PM

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