Consumer spending gave the U.S. economy its fastest gain in two years

GDP - output of goods and services - in the United States in the third quarter of 2025 (July, August and September) grew by 4.4% year-on-year, compared with growth of 3.8% in the second quarter of 2025, according to updated data from the Bureau of Economic Analysis (BEA). This is the fastest growth rate in the last two years, the Associated Press notes, emphasizing that the U.S. economy has not grown so fast since the third quarter of 2023. These data slightly exceeded the previously forecasted BEA indicators - earlier the bureau expected GDP growth for the reporting period at the level of 4.3%.

The acceleration in GDP growth reflected higher investment and exports, as well as an acceleration in consumer spending, the BEA said in a release.

Meanwhile, the core personal consumption expenditures (PCE) index, which does not take into account volatile food and energy prices and is therefore the U.S. Federal Reserve's preferred inflation indicator, rose 0.2% sequentially in October and November last year, BEA data show. It also rose 2.8% in November from a year earlier. These figures, Barron's points out, are in line with the forecasts of analysts surveyed by FactSet and suggest that inflation remains firm but stable.

The data are being released with a delay due to last year's 43-day U.S. government shutdown, which paralyzed the work of most U.S. federal agencies. Therefore, officials and market participants are likely to attach less importance to these indicators than under normal circumstances, Barron's notes.

The U.S. economy, the Associated Press notes, is showing resilience despite the uncertainty associated with U.S. President Donald Trump's economic policies, in particular, his double-digit duties on imports from almost all countries of the world. Its growth, according to the latest data from the U.S. Bureau of Economic Analysis, was driven by strong consumer demand.

Personal consumption expenditures index - PCE - is considered to be the most preferred inflation indicator by the US Fed. Before the publication of economic data, most market participants believed that at the next Fed meeting on January 28, the rate will remain at the same level. Traders estimated the probability of its reduction by 25 basis points at only 5%, the CME Group's FedWatch Tool showed. After the publication of updated economic data, these estimates remained unchanged.

The markets are also assessing the uncertainty over who US President Donald Trump will choose to head the Federal Reserve, Reuters writes. Trump recently renewed his criticism of the current chairman of the US Central Bank Jerome Powell - Trump is dissatisfied with the "not aggressive enough" reduction of interest rates, which, in his opinion, is slowing down the US economy. In mid-January, Powell said that the U.S. Justice Department had opened a criminal investigation against him, which increased market fears about the independence of the Fed.

The broad index of American stocks S&P 500 opened January 22 in the green zone and trades in a slight plus (0.38%), technology Nasdaq Composite added 0.68% in early trading, industrial index Dow Jones in the plus by 0.64%.

This article was AI-translated and verified by a human editor