The U.S. economy is growing well above expectations on an inflation-adjusted basis, blowing the barn doors off the hinges, at 4.3 percent annualized in the third quarter, the highest since 2023, according to the latest Gross Domestic Product (GDP) numbers from the Bureau of Economic Analysis.
President Donald Trump praised the economy’s performance, by far the best news economically all year long, stating in a post on Truth Social, “Q3 GDP came in at 4.3%, BLOWING PAST expectations of 3.2%. 60 of 61 Bloomberg Economists got it WRONG, but ‘TRUMP,’ and some other Geniuses, got it right. The SUCCESS is due to Good Government, and TARIFFS. Consumer spending is STRONG, Net Exports are WAY UP, Imports and Trade Deficits are WAY DOWN, and there is NO INFLATION! Because of my Tax Bill (THE GREAT BIG BEAUTIFUL BILL) and TARIFFS, INVESTMENT IS SETTING RECORDS. The Trump Economic Golden Age is FULL steam ahead — ‘You haven’t seen anything yet!’ Thank you for your attention to this matter. MAKE AMERICA GREAT AGAIN!”
That follows 3.8 percent growth in the second quarter, for average growth of almost 4.1 percent the last two quarters as President Trump’s trade policies have taken effect.
And the best is yet to come.
Unfortunately, not that it matters in the great scheme of things, when you factor the -0.6 percent growth in the first quarter as the Biden economy was collapsing, the average growth rate for 2025 drops to 2.5 percent for the last three quarters, setting up a daunting task for average annual growth to hit 3 percent.
Besides 2021 when the economy was recovering from the unusual Covid recession of 2020 — average annual real GDP growth those two years was -2.1 percent and 6.15 percent — the U.S. economy has not grown at 3 percent or higher since 2005. Since 2001, the economy has only averaged 2.14 percent. That compares to 3.6 percent average annual growth from 1947 to 2000.
Sadly, despite the bounceback in the last two quarters, 2025 will not be any different. Using the Bureau’s formula for average annual growth, which it describes as “a variant of the compound interest formula” and averages each quarter’s real, inflation-adjusted GDP for the entire year compared to the prior year’s average for four quarters, the economy is very unlikely to hit 3 percent this year with that bad first quarter.
The quarterly real GDP rate published is the compound growth rate annualized, whereas the annual growth is just the simple growth rate of the average real GDP.
In order to hit 3 percent in 2025, the average real, inflation-adjusted GDP — different from nominal GDP of $31.09 trillion — for the year will need to be about $24.06 trillion. To get there from the real GDP’s current dollar value of $23.78 trillion and bring up the average annual growth upwards to 3 percent, reported annualized GDP for the fourth quarter would need to come in at an astronomical 15.38 percent! Yikes.
But that’s okay. The economy is clearly on the right track. Keep in mind the reported 4.3 percent growth, the best since 2023, is after inflation. That’s super healthy and shows the country is definitely getting wealthier. Whereas, nominal growth of the GDP in the last quarter was 8.2 percent.
Consider it an early Christmas present.
With 2026 right around the corner, as the most important provisions of the One Big Beautiful Bill Act go into effect, come what may — the unemployment level has been climbing 2.1 million since January 2023, and there’s still the fourth quarter to report — we can already begin to see that the potential growth of the U.S. economy is much greater than anyone thinks, except, of course, for President Trump, who is aspirationally committed to knocking it out of the park in the years to come. Whatever the numbers are, he’s swinging for the fences.
Thank you, Mr. President, and to all, have a Merry Christmas and a Happy New Year.
Robert Romano is the Executive Director of Americans for Limited Government Foundation.
