The U.S. economy delivered a surprisingly strong performance in the third quarter, growing at an annualized rate of 4.3%, well above what most economists had anticipated. One of the biggest contributors to that growth was a sharp surge in corporate profits, which jumped by more than $166 billion, a dramatic increase compared to the modest $6.8 billion gain seen in the previous quarter.
According to the Commerce Department’s delayed GDP report, the expansion was powered by rising consumer spending, stronger government investment, and increased exports. American households spent more on health care, recreational products, and everyday essentials such as prescription drugs. At the same time, imports declined, narrowing the trade gap and mechanically boosting GDP growth.
The White House argues that this momentum reflects a broader expansion of the private sector. Officials also credit tariff policies for reducing imports and encouraging domestic investment. President Donald Trump highlighted the report as proof that his economic strategy is working, pointing to strong consumption, rising investment, and a smaller trade deficit.
Business investment showed notable resilience, especially in equipment and intellectual property, including software and technology development. These categories continued to grow, supporting the administration’s claim that long-term productive capacity is improving.
However, beneath the headline numbers, the picture is more complex. Despite strong GDP growth for consecutive quarters, the labor market has not strengthened at the same pace. Jobless rates have ticked up, and consumer confidence recently declined, reflecting growing concerns about future earnings and job availability.
Economists have warned that the U.S. may be experiencing a structural shift where economic output rises without a corresponding increase in employment. Mohamed El-Erian has described this as a troubling “decoupling” between GDP growth and job creation, driven in part by rapid advances in artificial intelligence. AI investment and soaring tech valuations have boosted productivity, but they have also reduced the need for labor in certain sectors.
This trend matters politically as well. If workers do not feel the benefits of growth through higher wages or job security, GDP figures may carry less weight with voters. Signs of strain are already visible: disposable personal income showed no growth during the quarter, and retail sales data pointed to softer consumer momentum heading into the holiday season.
Inflation remains another challenge. The Federal Reserve’s preferred inflation measure rose at a 2.8% annual rate, up from the prior quarter, adding pressure to household budgets. Polling suggests that concerns over affordability continue to weigh on public perceptions of the administration’s economic management.
Even so, administration officials remain upbeat. They argue that strength in consumer spending, solid capital investment, and a narrower trade deficit indicate a durable expansion. Whether that growth can translate into broader employment gains and sustained income growth will likely define the economic and political debate in the months ahead.
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