US Economic Growth in Q3: Drivers, Distortions, and the 2026 Outlook

In this paper, we discuss:

• The US economy’s surprisingly strong Q3 2025 growth, driven by consumption, government spending, and net exports rather than investment;
• How tariff-related timing effects and trade front-loading temporarily boosted GDP, masking underlying fragilities;
• Signs of cooling momentum by late 2025, with slower job growth and inflation easing but still above target;
• A 2026 outlook of slower but positive growth, vulnerable to trade shocks, weak investment, and policy uncertainty.

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