Former US President Donald Trump has declared the arrival of an "economic golden age," pointing to surprisingly strong growth figures for the world's largest economy in the third quarter. The data, however, also reveals persistent inflation and signs of a cooling job market, presenting a mixed picture.
Trump's Victory Lap on Social Media
Seizing on the latest economic report, Trump took to his Truth Social platform to celebrate. He stated that the US economy's 4.3% annualised growth rate for the July-September quarter had decisively surpassed expectations. Attributing the success to his policy framework, he wrote, "The SUCCESS is due to Good Government, and TARIFFS." He further asserted that consumer spending was robust, net exports were significantly up, and imports and trade deficits were down, adding the bold claim that "there is NO INFLATION." Trump credited his tax bill and tariffs for record investment, proclaiming the "Trump Economic Golden Age is FULL steam ahead."
Behind the Strong GDP Numbers
The Commerce Department's initial estimate, released after delays from a government shutdown, confirmed the 4.3% annualised expansion in Gross Domestic Product (GDP). This marked an acceleration from the 3.8% growth seen in the April-June period and comfortably exceeded analyst forecasts of around 3%.
The growth engine was powered by several key factors:
- Consumer Spending: Rising at a 3.5% annual pace (up from 2.5% in Q2), this remained the primary driver, accounting for about 70% of US economic activity.
- Trade Boost: Exports surged at an 8.8% rate, while imports fell by 4.7%, providing a substantial lift to the overall GDP figure.
- Government Outlays: Increased government spending also contributed to the quarter's strength.
A core measure of underlying economic strength, which focuses on consumer spending and private investment while excluding volatile elements, grew at a steady 3% annual rate.
The Other Side of the Story: Inflation and Labour Market
Despite the headline growth, the report highlighted ongoing economic challenges that contradict Trump's "no inflation" statement. The Federal Reserve's preferred inflation gauge, the Personal Consumption Expenditures (PCE) index, rose at a 2.8% annual pace in Q3, up from 2.1% in the previous quarter. The core PCE inflation, which excludes food and energy, climbed to 2.9% from 2.6%, remaining stubbornly above the Fed's 2% target.
Recent labour market data has also been mixed, signalling potential softening. Reports show the US economy added 64,000 jobs in November but lost 105,000 in October. The unemployment rate has risen to 4.6%, its highest level since 2021. Citing concerns about slowing hiring momentum, the Federal Reserve cut its benchmark interest rate three times towards the end of 2025, even with inflation above its target.
The robust GDP growth provides ammunition for political claims of economic success, but the accompanying details on prices and employment suggest the economic landscape is more complex, with policymakers continuing to navigate between supporting growth and controlling inflation.
