It is the economic gift Donald Trump has been waiting to unwrap.
The US economy has surged ahead at a blistering 4.3 per cent in the third quarter, its fastest pace in two years, smashing through forecasts that had predicted a far more modest expansion and handing the former president a powerful political boost heading into the festive season.
The blockbuster figures show growth accelerating sharply from 3.8 per cent in the previous quarter and comfortably eclipsing economists’ expectations of around 3.2 per cent, prompting celebrations among Trump allies and disbelief among his critics.
Former Conservative cabinet minister Nadhim Zahawi was quick to hail the numbers, declaring on social media:
“This is incredible growth and all those who attacked @POTUS policy should acknowledge & eat humble pie. What would a UK Chancellor give for 4 plus percent growth! Well done team USA.”
Data centres, spending and trade fuel the boom
Behind the headline figure lies a potent mix of booming investment, robust consumer spending and a dramatic swing in trade.
A wave of record investment in data centres, driven by the artificial intelligence revolution, powered growth higher, while consumers opened their wallets with gusto. Household spending jumped 3.5 per cent, buoyed by rising stock markets that have inflated personal wealth across large swathes of America.
Trade proved an unexpected turbocharger. Exports leapt 8.8 per cent while imports fell 4.7 per cent, adding a hefty 1.6 percentage points to overall GDP growth, numbers that delighted Mr Trump.
Never one to miss an opportunity, the former president claimed vindication for his protectionist agenda, posting online:
“The TARIFFS are responsible for the GREAT USA Economic Numbers JUST ANNOUNCED…AND THEY WILL ONLY GET BETTER!”
Markets jolt as rate cut hopes fade
Financial markets reacted swiftly. The yield on the 10 year US Treasury bond, which underpins government borrowing costs, jumped after the data were released, a sign investors believe the economy may now be running too hot for further easy money.
The stronger than expected performance has led traders to reassess whether the US Federal Reserve can continue cutting interest rates after three reductions in recent months.
Samuel Fuller, a director at Financial Markets Online, warned that policymakers may soon have their hands tied.
“The US Federal Reserve has cut rates three times in a row in recent months, but the combination of stubborn inflation and resilient growth will likely take any further cuts off the table for the start of 2026,” he said.
Storm clouds ahead, but momentum remains
Not everything is rosy. A prolonged government shutdown triggered by a congressional standoff over Mr Trump’s plans to roll back healthcare subsidies threatens to sap momentum later in the year.
Economists fear growth in the fourth quarter could cool to nearer 2 per cent annualised, though most stress the economy still has considerable underlying strength.
Federal Reserve chairman Jerome Powell has suggested that Mr Trump’s fiscal plans, including proposed $2,000 (£1,500) cash handouts, could help reignite growth in 2026.
Households are expected to shoulder much of the economic burden next year, even as Washington remains locked in bitter debates over the cost of living.
“Despite rising prices and a tepid jobs market, Americans continue to spend strongly,” Mr Fuller said.
A tale of two Americas
Yet critics warn the boom is uneven. Many analysts now describe the US economy as K shaped, with wealthier Americans enjoying rising living standards, while lower income households struggle.
Business investment outside the AI and data centre boom is slowing, and Deutsche Bank has cautioned that without the tech fuelled surge, the US would be close to recession this year.
For now, however, the headline number is impossible to ignore.
At 4.3 per cent, America’s economy is thundering ahead, and for Donald Trump, it may be the most valuable Christmas present of all.
