The U.S. economy surged at a 4.3% annualized pace in the third quarter of 2025, shattering economists’ recession warnings amid President Trump’s tariff rollout and immigration curbs, according to the latest Bureau of Economic Analysis report. Consumer spending, led by affluent households, and massive investments in AI data centers propelled this unexpected vigor, even as job growth cooled and personal savings hit multiyear lows.

Joseph Brusuelas, chief economist at RSM, highlighted that AI investment and household consumption from higher-income Americans drove nearly 70% of third-quarter growth. This resilience persists despite a sour consumer mood, with the Conference Board’s confidence index posting five straight monthly declines through December, as reported by the organization.

Consumer Spending Defies Pessimism

Americans’ unrelenting purchases—up 3.9% in retail excluding autos from Nov. 1 to Dec. 21 year-over-year—signal ongoing expansion amid uncertainty, per Mastercard SpendingPulse. Michelle Meyer, Mastercard’s chief economist, noted, “It very much indicates that the U.S. economy is continuing to expand, even in the face of heightened uncertainty,” with clothing sales showing particular strength.

The top 10% of earners now drive nearly half of national spending, fueling premium travel and luxury goods. Airlines report robust international and first-class bookings, while high-end holiday sales thrive, even as lower-income groups trim budgets, according to industry executives cited in Reuters.

Affluent Shoppers Lead the Charge

Disposable personal income stagnated after inflation in Q3, yet the savings rate plunged to its lowest since 2022, underscoring spend-now tendencies, the GDP report revealed. Michael Hicks, economics professor at Ball State University, attributes this to pre-tariff stockpiling: “If I’m going to get my kids an Xbox, I’d better do it early.”

Business owners like Damien Cabral of PrepU in Rhode Island echo this duality, investing $100,000 in his career-placement firm despite economic worries. “It feels like you’re in the ocean with your neck just above the water,” Cabral said, still funding family ski passes and holiday gifts amid personal cutbacks.

AI Buildout Fuels Unexpected Growth

Enormous outlays on data centers—totaling about $41 billion annually—have become a cornerstone, with AI-related hardware and software accounting for over 90% of GDP growth in the first half of 2025, posts on X from analysts like StockMarket.News noted. Deloitte Insights’ Q4 forecast emphasizes that AI investment supports momentum, though sustainability questions linger (Deloitte).

The Kobeissi Letter on X pointed out U.S. private nonresidential fixed investment in data centers soared 300% over three years, while other structures stagnated. This shift powers expansion without broad manufacturing revival, countering Trump’s promises but validating the economy’s adaptability.

Tariffs Backfire on Forecasters

Early 2025 saw economists slash growth forecasts post-Trump’s “Liberation Day” tariffs; a Wall Street Journal survey pegged recession odds at 45% by April, up from 22% in January. Goldman Sachs and JPMorgan hiked their probabilities, with Jamie Dimon warning of slowed growth.

Trump later moderated extreme measures, enabling import workarounds that averted shelf shortages and price spikes. Q1 contraction stemmed from pre-tariff import rushes, not weakness; Q2 and Q3 rebounds followed, with The New York Times confirming 4.3% Q3 growth as the strongest in two years.

Job Market Weakens Amid Expansion

Ryan Sweet of Oxford Economics calls it a “jobless expansion,” with GDP rising but labor sagging: “This leaves the economy vulnerable to shocks, because the labor market is the main firewall against a recession.” Hiring slowed, unemployment ticked up, and layoffs rose at firms like Chipotle and Walmart.

A looming government shutdown in Q4 poses a drag, alongside cooling business investment outside AI. Camelia Kuhnen of the University of North Carolina warned, “While the Q3 GDP number says the U.S. economy was growing at a nice pace… there are reasons to be concerned about what the growth rate will be like going forward.”

Global Outperformance Persists

The U.S. blows past peers, with CBS News noting experts’ upgraded 2025 grades despite public discontent. Morgan Stanley forecasts U.S. resilience leading 2026 growth via AI boosts (Morgan Stanley), even as tariffs weigh on global peers.

Posts on X from users like Bil@l Ahm@d celebrated the 4.3% print trumping IMF warnings of 1.8% growth. Hindustan Times captured the irony: “The unrelenting American consumer spends through a sour mood and a cooling labor market” (Hindustan Times).

Warning Signals in the Data

Walker Strangis of Walker Wine Co. saw sales dip from tariff-hiked import costs, though affluent buyers and storage demand surge. “I’m turning business away because I don’t have the space,” he said. Luxury holds, but broader pressures mount on younger consumers.

Recent Guardian coverage underscores the divide: Wealthy spending sustains hum, while others retreat. MBA student Kush Nayak travels Europe and Japan undeterred: “I only get my M.B.A. once.”