US Economic Growth Fueled by Credit Card Spending for Groceries

The Illusion of Growth: How Credit Cards Are Driving US Economic Expansion

The latest economic data reveals a striking contrast between the United States and the Netherlands, with the US reporting 4.3% growth in the third quarter of 2025 compared to just 0.5% in the Netherlands. However, macro-economist Edin Mujagic warns that these headline numbers mask a deeper, more concerning reality about the nature of American economic growth.

The Measurement Mirage

The 4.3% US growth figure is calculated using American methodology, which differs significantly from European standards. 'If that American number had been reported according to the European method, we would have been talking about growth of 1.1 percent,' explains Mujagic. While still double the Dutch figure, this adjustment reveals that the actual gap between the two economies is much smaller than initial appearances suggest.

The difference stems from how GDP growth is measured across continents. The US typically reports annualized quarterly growth rates, while European countries like the Netherlands use quarter-over-quarter comparisons that aren't annualized.

Consumption Without Income Growth

What's most alarming about the US growth figures is their source. Approximately half of the economic expansion came from household consumption, with Americans spending significantly more in Q3 2025. Yet this increased spending occurred without corresponding growth in disposable income.

'Household consumption in the United States increased by 3.5 percent in the third quarter. That is substantial, but the disposable income of those same households did not increase,' notes Mujagic. This disconnect points to a troubling trend: Americans are spending more while their actual purchasing power remains stagnant.

The Credit Card Economy

Two key factors explain this phenomenon. First, a significant portion of Americans turned to credit cards to finance their spending. According to the Federal Reserve Bank of New York's Q3 2025 Household Debt and Credit Report, credit card balances rose by $24 billion to $1.23 trillion during this period.

'That means: you can spend, but it's a debt you have to repay, and there are very high interest rates attached to it,' Mujagic emphasizes. This creates a precarious situation where economic growth is being fueled by debt accumulation rather than genuine wealth creation.

Second, a wealth effect from rising stock markets has benefited a relatively small segment of the population. 'They not only feel richer, they actually are, and they spend a significant portion of that extra wealth,' says Mujagic. This highlights a growing economic divide in America.

The Dutch Contrast: Caution Over Consumption

Meanwhile, the Netherlands presents a different economic picture. While Dutch disposable income actually increased by 3.8% - more than American households - consumer spending contributed almost nothing to economic growth.

According to Statistics Netherlands, the 0.5% growth was primarily driven by government spending and exports. 'If the government creates growth, that is short-term. They then spend more than a budget deficit arises,' Mujagic warns about the sustainability of this approach.

The Dutch caution reflects broader economic uncertainty. 'I think people are worried. They have the money to spend, but don't know what will happen next year: a new government, what policy, how will the economic situation in the world develop?' explains Mujagic.

Resilience vs. Sustainability

Despite concerns about debt-fueled growth, the US economy continues to demonstrate remarkable resilience. 'Quarter after quarter, the economy shows that it can simply continue to grow,' observes Mujagic. 'You have to see this as a very clear sign that the American economy is extremely resilient.'

This resilience is evident in multiple sectors. Export growth contributed significantly to US expansion, with America selling more goods abroad than it imported. This was partly due to import tariffs making foreign products less attractive to Americans, combined with a weaker dollar making US goods cheaper internationally.

However, business investment showed minimal growth, raising questions about long-term economic health. 'The investments of companies showed a very small minus, that really shouldn't have a name,' notes Mujagic about the lackluster corporate spending.

Looking Ahead: Two Different Economic Paths

The contrasting economic stories of the US and Netherlands reveal fundamentally different approaches to growth. America's credit-fueled expansion creates immediate economic activity but raises concerns about household debt sustainability. The Netherlands' more cautious approach prioritizes fiscal responsibility but may limit short-term growth potential.

As both economies navigate uncertain global conditions, the key question becomes which model proves more sustainable in the long run. For now, the data suggests that while the US economy may appear stronger on paper, its foundation includes significant debt that could pose challenges when interest rates remain elevated and economic conditions eventually shift.