U.S. Economic Growth Revised Higher in Q3 as Exports, Investment and Profits Strengthen

The U.S. economy expanded slightly faster than previously estimated in the third quarter, while corporate profits were also revised higher, underscoring the resilience of growth through late summer.

Gross domestic product rose at an annualized rate of 4.4% in the July to September period, according to the Commerce Department’s updated estimate released Thursday. That marks the strongest pace of expansion since the third quarter of 2023 and exceeds the initial reading of 4.3%, which economists had expected to remain unchanged. Growth in the second quarter stood at 3.8%.

The upward revision reflected stronger exports and firmer business investment. Imports were also revised higher, which partially offset the gains since they subtract from GDP. Even so, consumer spending and a narrower trade deficit remained the primary engines of growth during the quarter.

Household consumption, which accounts for more than two thirds of U.S. economic activity, increased at a robust 3.5% annualized pace. A closely watched measure of underlying domestic demand, final sales to private domestic purchasers, rose at a 2.9% rate, slightly lower than the previously estimated 3.0%.

Economists noted that activity continues to display what they describe as a K shaped pattern, where higher income households and large corporations carry a disproportionate share of growth. They attribute this divergence in part to President Donald Trump’s policies, including aggressive import tariffs that have pushed up prices.

Rising stock markets and elevated home values have helped shield wealthier households from inflation, while lower and middle income consumers face fewer options to adjust spending. Large corporations, economists said, generally have the financial flexibility to absorb higher input costs tied to tariffs. Smaller businesses, by contrast, are struggling to stay afloat, compounded by a tighter supply of low cost labor amid an immigration crackdown.

Corporate profitability also improved. Profits from current production increased at a $175.6 billion annual rate in the third quarter, an upward revision of $9.5 billion from the previous estimate, adding to evidence of solid momentum in the business sector during the period.