“The most stunning GDP report I’ve seen in ages,” Bloomberg’s Tom Keene reports this morning, raising the prospect of “a truly boom economy.” To be sure, the 4.3 percent expansion of the economy in the third quarter exceeds even the most optimistic expectations from analysts. The pace of growth, even if subject to revision, seems to offer a vindication of President Trump’s economic policies — with some caveats.

The Commerce Department’s initial estimate for third quarter GDP marks a quickening of economic growth from the previous quarter, which recorded 3.8 percent growth. It reflects, per the department, “increases in consumer spending, exports, and government spending” that surmounted “a decrease in investment.” Imports, the department added, “which are a subtraction in the calculation of GDP,” fell.

One economist who is not surprised by the GDP report is our columnist, Larry Kudlow, who tells us that the growth rate is even higher, 4.7 percent, for the quarter if the public sector is taken out of the equation. He avers that a “business boom has already started,” crediting the positive impact of tax cuts and Mr. Trump’s deregulatory drive, and notes that “the trade deficit is falling.” He foresees 5 percent growth in 2026, barring a government shutdown.

The White House was quick to crow that the GDP growth indicates that “the doubters, naysayers, panicans, and liberal media have been proven wrong — again,” as press secretary Karoline Leavitt put it. Mr. Trump, on Truth Social, credited the growth to “Good Government, and TARIFFS.” He added that “Consumer spending is STRONG, Net Exports are WAY UP, Imports and Trade Deficits are WAY DOWN, and there is NO INFLATION!”

One hardly wants to rain on Mr. Trump’s parade by pointing out that the November reading of the consumer price index was 2.7 percent over the prior year. That level of inflation exceeds the Federal Reserve’s target of 2 percent and underscores the persistence of stubborn price increases, even if inflation has slowed from its decades-high pace under the Biden administration, during which consumer prices soared some 20 percent overall.

Consumers’ frustration over stubbornly high prices — a feature of our fiat money system, in which, these columns argue, prices tend to ratchet ever higher, without retreating back to earlier levels — is at the heart of today’s debate over “affordability.” Yet consumer spending, accounting for some 70 percent of American economic activity, rose by 3.5 percent in the quarter, an increase from the prior period. So consumers are still spending, despite higher prices.

The downside of higher prices is mitigated, though, as Mr. Kudlow has explained, by rising wages. The most recent jobs report, he points out, showed wages up by some 5 percent. Mr. Kudlow reckons that “compared to 2 percent or even less future inflation,” the boost in salaries “gives real wage affordability of 3 big percentage points.” It’s a reminder that growth can serve as the most potent antidote to the scourge of inflation. 

One area where there appears to be room for improvement is the manufacturing sector — the purported beneficiary of Mr. Trump’s tariffs. The Wall Street Journal reports that American manufacturing activity, as of November, had contracted for nine consecutive months. There were fewer manufacturing jobs in November than there were in January, when Mr. Trump took office, according to data from the St. Louis Fed.

This is not to suggest that Mr. Trump’s policies in general — including tariffs — won’t yield long-term benefits. For now, the best news about the GDP number is how it defies the predictions of “secular stagnation” or sniffing at the idea of a Trump boom. This view, advanced by economists like Treasury Secretary Larry Summers, holds that America must get used to 2 percent growth. The GDP growth suggests the right policies can avert that course.