(Kitco News) - The U.S. economy showed unexpected strength in the third quarter as growth increased more than expected between July and September.
The Bureau of Economic Analysis announced the initial reading of the third-quarter Gross Domestic Product on Tuesday, saying the economy grew 4.3% quarter over quarter, up from 3.8% in the second quarter. The data was significantly better than economists' expectations, as consensus forecasts were looking for a growth rate of 3.3%.
“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,” the report said. “Compared to the second quarter, the acceleration in real GDP in the third quarter reflected a smaller decrease in investment, an acceleration in consumer spending, and upturns in exports and government spending. Imports decreased less in the third quarter.”
Due to the recent government shutdown, this initial report for the third quarter of 2025 replaces the advance estimate originally scheduled for October 30 and the second estimate originally scheduled for November 26.
The gold market was trading near session highs prior to the 8:30 a.m. EST release, and the yellow metal maintained its elevated levels in the minutes afterward. Spot gold last traded at $4,489.72 per ounce for a gain of 1.03% on the session.
Looking at some of the components of the report, real consumer spending rose 3.5% in Q3 after increasing 2.5% in Q2 and compared to economists’ 2.2% expectation.
The report also noted that inflation ticked higher. The advance Core Personal Consumption Expenditures (PCE) Index for Q3 rose 2.9%, in line with economists’ expectations but higher than the 2.6% from Q2, and the advance GDP Price Index increased 3.7% quarter over quarter against expectations of a 2.7% reading and Q2’s 2.2%.
Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management, told Kitco News that while the GDP data may be overlooked so close to Christmas, the number was exceptional.
"Not only was it 0.5% higher than the previous reading, it was a full percentage point higher than what was expected," he said. "If the economy keeps producing at this level, then there isn’t as much need to worry about a slowing economy and concerns may actually flip back to the price-stability constraint."
"There will likely be light trading volume, but the path of least resistance is higher until the end of the year," Zaccarelli added.
