U.S. economy likely posts fastest GDP growth in a year on consumer spending, AI investment

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Highlights

Analysts expect U.S. GDP to grow at a 3.2–3.3% annualized rate in Q3 2025, the fastest pace in a year, led by consumer spending and AI investment.
Goldman Sachs forecasts personal consumption expenditures to rise at 3.4% annualized and business fixed investment to increase 10.2% in Q3 2025.
September's goods trade deficit widened by $2.8 billion to $134.9 billion, with Oxford Economics estimating a 3.25 percentage point drag on GDP from trade.

Growth drivers ahead of Thursday data

As reported by Axios, citing Bloomberg, analysts expect U.S. gross domestic product to rise at a 3.2% annualized rate in the July-through-September quarter, while the Federal Reserve Bank of Atlanta's GDPNow tracker estimates 3.3%. Either outcome would mark the fastest pace of growth since the third quarter of 2025.

Data on personal consumption, income and inflation for September is also due at the same time. The Personal Consumption Expenditures Price Index, the Federal Reserve's preferred inflation gauge, is expected to rise 0.5% on the month and accelerate to 3.6% over the previous 12 months.

The main support for growth is likely to come from consumer spending, particularly from wealthier households benefiting from strong asset gains, along with business investment tied to the AI buildout. Goldman Sachs economists expect personal consumption expenditures to grow at a 3.4% annual rate and business fixed investment to increase 10.2%.

Trade drag tempers AI spending boost

A sharp increase in imports is likely to offset part of that strength, reflecting the role of imported semiconductors in expanding data center capacity. Preliminary government figures released Wednesday show the goods trade deficit widened by $2.8 billion to $134.9 billion in September, the largest gap since March 2025.

That suggests trade will subtract from headline GDP, with Oxford Economics economist Grace Zwemmer estimating a 3.25 percentage point drag. Even so, strong September capital goods imports indicate some of the hit from net exports is likely to be balanced by a sizable increase in private inventories and faster business equipment spending.

The result is that AI-led capital expenditure is lifting economic output, but the net boost is smaller than the headline investment figures suggest because a significant share of that expansion relies on imports.

In our earlier article on the U.S. AI data center boom, we looked at how the surge in planned projects is running into higher financing costs, construction delays, and mounting limits on power availability. We noted that only a minority of announced builds are viewed as truly credible, as tighter funding conditions, cost overruns, and local resistance raise the risk that the infrastructure rollout may fall short of expectations.

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