Mint Explainer | How the US economy defied expectations in 2025

Mint looks at how the world’s largest economy has defied expectations and stayed resilient in 2025 despite multiple challenges. Will this dream run continue in 2026?Yes.

According to data released by the Federal Bureau of Economic Analysis, the US economy grew by 4.3% in the third quarter—the fastest pace in nearly two years. This is 130 basis points more than the 3% growth that experts had projected.

In the second quarter, the US economy grew by 3.8%. Overall growth in the first three quarters of this year is 2.5%.Strong consumer spending, higher corporate artificial intelligence investments, larger defence spending by the government, higher exports and lower imports ensured the US gross domestic product rose sharply in the third quarter.After Donald Trump returned as the President of the US in January and unleashed his tariff war and the fight against illegal immigration, the general expectation was that the US economy would slip into a recession.The high tariffs would cause prices to rise in the largely import-dependent economy, leading to runaway inflation, which in turn would force the Federal Reserve to increase interest rates.Large-scale deportation of illegal migrants would create a labour shortage in select sectors such as agriculture and push up wage costs sharply.

All these, experts warned, would cause economic growth to stall and slip into recession.No. There has been no runaway inflation.

This is because Trump has either rolled back or exempted many critical products from his steep tariffs. Inflation remains at near 3% levels only.Though the US Department of Homeland Security claimed that 2.5 million illegal immigrants have left the US both through enforcement and voluntary action, the wage spiral has not