US economy driven by AI and data centre investment surprises markets with strong growth

The United States economy has experienced its fastest expansion in two years, with gross domestic product rising by 4.3 percent in the third quarter of 2025. This surge surpasses both the previous quarter’s 3.8 percent pace and analysts’ expectations of 3.2 percent. The primary drivers of this growth have been unprecedented investment in data centres, as well as an AI-fuelled rally in the stock market that has provided a substantial boost to household wealth.

Consumer spending jumped by 3.5 percent during the period. The AI boom’s influence on equity markets has translated into higher levels of consumption, underlining the increasing role of technology in shaping economic trajectories. Additionally, trade contributed significantly to GDP, adding 1.6 percentage points as exports grew by 8.8 percent and imports contracted by 4.7 percent.

President Donald Trump attributed the strong figures to tariffs, though this claim was made without supporting evidence. The announcement of robust GDP growth led to an immediate rise in the yield on ten-year US Treasury bonds, signaling that markets are recalibrating expectations regarding future interest rate adjustments by the Federal Reserve.

After three consecutive cuts to the benchmark interest rate this year, expectations for further easing have diminished. Persistent inflation and resilient economic performance suggest that the Federal Reserve may delay any additional reductions until well into 2026. The recent government shutdown, a consequence of political deadlock over health care subsidy reforms, is expected to dampen fourth quarter growth, potentially lowering it to around 2 percent. Nevertheless, policymakers including Federal Reserve Chair Jerome Powell forecast that forthcoming fiscal measures, such as proposed cash handouts of two thousand dollars to taxpayers, will underpin a rebound in 2026.

Households are likely to remain the main force powering growth as political debates around cost of living continue. Rising prices and a modest labour market have not deterred Americans from maintaining elevated spending levels. Despite this resilience, economists have characterised the recovery as K-shaped, with higher-income households enjoying improved living standards while lower-income groups risk falling behind.

Outside of the AI sector and data centre construction, business investment appears to be slowing. Without the momentum provided by artificial intelligence and related infrastructure, analysts at Deutsche Bank caution that the US could be facing recessionary conditions. The durability of the current boom is thus closely tied to continued innovation and investment in advanced technologies.