The US economy has picked up speed over the three months to September, as consumer spending jumped and exports increased. The world's largest economy expanded at an annual rate of 4.3%, up from 3.8% in the previous quarter. That was better than expected, and marked the strongest growth in two years.
The report, which had been delayed by the US government shutdown, sheds light on an economy that has been buffeted by dramatic changes to trade and immigration policies, as well as persistent inflation and cuts to government spending. While these factors have resulted in significant swings in some areas, such as imports and exports, the underlying economy has maintained solid momentum, outperforming many forecasts.
This is an economy that has defied doom and gloom expectations since the beginning of 2022, said Aditya Bhave, senior economist at Bank of America. He described the economy as very very resilient and expressed confidence that this trend would continue moving forward.
The overall growth figure for the third quarter was much stronger than expected, with most analysts anticipating an annual pace of about 3.2%. Consumer spending, accounting for much of the increase, rose at an annual rate of 3.5%, compared to 2.5% in the previous quarter. Despite a slowing job market, households increased spending on healthcare services.
Imports continued to decline due to taxes on shipments entering the US, while exports saw a notable recovery, surging by 7.4%. Government spending also rebounded, largely driven by defense expenditures. These factors helped offset a slowdown in business investment and challenges in the housing market, which is grappling with high interest rates.
Michael Pearce, chief US economist at Oxford Economics, noted that the economy is well positioned as it heads into 2026, likely to benefit from tax cuts and the Federal Reserve's recent decisions to decrease interest rates.
Despite positive growth indicators, some analysts cautioned that rising prices might impede sustained momentum, particularly for lower and middle-income households. Recent inflation data showed an increase in consumer prices, emphasizing the need for a close watch on spending trends across various income levels.
The report, which had been delayed by the US government shutdown, sheds light on an economy that has been buffeted by dramatic changes to trade and immigration policies, as well as persistent inflation and cuts to government spending. While these factors have resulted in significant swings in some areas, such as imports and exports, the underlying economy has maintained solid momentum, outperforming many forecasts.
This is an economy that has defied doom and gloom expectations since the beginning of 2022, said Aditya Bhave, senior economist at Bank of America. He described the economy as very very resilient and expressed confidence that this trend would continue moving forward.
The overall growth figure for the third quarter was much stronger than expected, with most analysts anticipating an annual pace of about 3.2%. Consumer spending, accounting for much of the increase, rose at an annual rate of 3.5%, compared to 2.5% in the previous quarter. Despite a slowing job market, households increased spending on healthcare services.
Imports continued to decline due to taxes on shipments entering the US, while exports saw a notable recovery, surging by 7.4%. Government spending also rebounded, largely driven by defense expenditures. These factors helped offset a slowdown in business investment and challenges in the housing market, which is grappling with high interest rates.
Michael Pearce, chief US economist at Oxford Economics, noted that the economy is well positioned as it heads into 2026, likely to benefit from tax cuts and the Federal Reserve's recent decisions to decrease interest rates.
Despite positive growth indicators, some analysts cautioned that rising prices might impede sustained momentum, particularly for lower and middle-income households. Recent inflation data showed an increase in consumer prices, emphasizing the need for a close watch on spending trends across various income levels.
