The US economy accelerated strongly during the three months to September as consumer spending rose and exports rebounded. Economic output expanded at an annual rate of 4.3%, well above expectations. Growth improved from 3.8% in the previous quarter and reached the fastest pace in two years.
The figures arrived after delays caused by a federal government shutdown. The report outlined an economy shaped by changing trade policies, immigration shifts, persistent inflation, and reduced public spending. These pressures created sharp swings in trade activity. Despite that volatility, overall momentum remained solid and exceeded many forecasts.
Resilience surprises economists
Aditya Bhave, senior economist at Bank of America, said the economy consistently defied pessimistic expectations since early 2022. He described current conditions as extremely resilient during an interview on a global business programme. Bhave said he saw no clear reason for that strength to weaken going forward.
Many economists had predicted slower growth. Forecasts pointed to annual expansion of around 3.2% for the third quarter. The final outcome surpassed those projections by a significant margin.
Consumer demand powers growth
Household spending delivered the strongest boost to economic growth. Consumer spending rose at a 3.5% annual rate, compared with 2.5% in the previous quarter. Spending increased even as the labour market showed signs of cooling. Households spent more on healthcare services during the period.
Imports continued to decline and reduced their drag on growth. The drop reflected new taxes on goods entering the country announced earlier this year. Exports rebounded sharply after earlier weakness and surged 7.4%. Government spending also recovered, driven largely by higher defence outlays.
Business investment and housing lag
Strong gains in consumption and trade offset slower business investment. Companies reduced spending, including investment in intellectual property. The housing market remained under pressure from elevated interest rates. High borrowing costs worsened affordability challenges and reinforced supply constraints.
Michael Pearce, chief US economist at Oxford Economics, said the economy headed toward 2026 from a position of strength. He said tax cuts and recent interest rate reductions should support future activity. Pearce added that underlying indicators remained consistent with steady expansion.
Inflation raises warning signs
Donald Trump welcomed the figures on social media and said tariffs drove the strong performance. He faced criticism as consumer confidence weakened and opinion polls showed dissatisfaction with his economic leadership. Some analysts questioned whether such rapid growth could be sustained.
Price pressures intensified during the quarter. The preferred inflation measure rose 2.8%, up from 2.1% in the previous quarter. Analysts warned that higher prices weighed most heavily on lower and middle income households. Higher income households continued to spend more freely.
Oliver Allen, senior US economist at Pantheon Macroeconomics, said recent data showed consumers becoming more cautious. Surveys and credit card data pointed to slower spending. Allen said weak labour conditions, stagnant real incomes, and depleted pandemic savings now constrained households.
