US Economy Beats Expectations to Expand at 4.4%

The U.S. economy grew at a faster-than-expected pace in the third quarter of 2025, underscoring continued resilience despite rising structural pressures and uneven gains across income groups.

According to an updated estimate released Thursday by the Bureau of Economic Analysis (BEA), gross domestic product (GDP) expanded at an annualized rate of 4.4% between July and September. The revised figure marks the strongest quarterly performance since the third quarter of 2023 and represents a slight upward adjustment from the previously reported 4.3% growth rate.

Economists surveyed by Reuters had largely anticipated that the initial estimate would remain unchanged. By comparison, the U.S. economy grew at a 3.8% pace in the second quarter.

The modest upward revision reflects stronger-than-expected exports and business investment, alongside an adjustment to imports, which are subtracted from GDP calculations. A narrowing trade deficit also played a notable role in supporting overall growth during the quarter.

Consumer spending, the backbone of the U.S. economy, accounting for more than two-thirds of economic activity, rose by 3.5% in the third quarter. However, a key measure of underlying domestic demand showed signs of cooling.

The core domestic demand indicator, known as final sales to private domestic purchasers, increased by 2.9%, down slightly from the previously estimated 3.0% growth rate, suggesting more moderate momentum beneath the headline figures.

Despite robust top-line growth, economists warn that the expansion is increasingly uneven, taking on what they describe as a “K-shaped” pattern, one in which higher-income households and large corporations continue to outperform, while lower- and middle-income groups face mounting constraints.

Analysts attribute much of this divergence to policies implemented under President Donald Trump, particularly the imposition of steep tariffs on imported goods. These measures have pushed prices higher, disproportionately affecting households with limited financial flexibility.

Rising stock markets and elevated home prices have helped shield wealthier households from inflationary pressures, while lower-income consumers face reduced purchasing power and fewer substitution options. Large corporations, economists note, are better positioned to absorb higher input costs linked to tariffs.

Small businesses, by contrast, are struggling to stay afloat, facing both higher costs and persistent labor shortages. Tighter immigration policies have reduced the supply of low-cost labor, compounding operational challenges for smaller firms.

Adding to the picture of corporate strength, current production profits surged by $175.6 billion in the third quarter, following an upward revision of $9.5 billion. The sharp increase highlights the growing gap between corporate earnings performance and the financial pressures confronting much of the workforce.