The US economy accelerated sharply in the three months to September as consumers spent more and exports recovered. Economic output expanded at an annual rate of 4.3%, beating expectations. Growth improved from 3.8% in the previous quarter and reached its strongest pace in two years.
The delayed data followed a federal government shutdown. The report showed an economy shaped by shifting trade rules, immigration changes, persistent inflation, and lower public spending. These forces caused sharp fluctuations in trade activity. Despite that volatility, the broader economy kept solid momentum and exceeded many forecasts.
Strength defies gloomy outlooks
Aditya Bhave, senior economist at Bank of America, said the economy repeatedly challenged negative predictions since early 2022. He described current conditions as exceptionally resilient during an interview on a major international business programme. Bhave said he expected that strength to persist in the period ahead.
Most economists had expected slower growth. Forecasts pointed to annual expansion of about 3.2% in the third quarter. The actual result surpassed those estimates by a wide margin.
Households drive faster expansion
Consumer spending delivered the largest boost to growth. Household spending rose at a 3.5% annual rate, compared with 2.5% in the previous quarter. Spending increased despite signs of cooling in the labour market. Households allocated more money to healthcare services.
Imports continued to fall and reduced their negative impact on growth. The decline reflected new taxes on goods entering the country announced earlier this year. Exports rebounded strongly after earlier weakness and surged 7.4%. Government spending also recovered, led by increased defence outlays.
Investment and housing remain weak spots
Strong consumption and trade offset a slowdown in business investment. Companies reduced spending, including investment in intellectual property. The housing market continued to struggle under elevated interest rates. High borrowing costs worsened affordability pressures and reinforced supply constraints.
Michael Pearce, chief US economist at Oxford Economics, said the economy approached 2026 from a strong position. He said tax cuts and recent interest rate reductions should support activity. Pearce added that underlying indicators remained consistent with steady expansion.
Inflation clouds future prospects
Donald Trump celebrated the figures on social media and credited tariffs for the strong performance. He faced criticism as consumer confidence weakened and opinion polls showed dissatisfaction with his economic leadership. Several analysts questioned whether such rapid growth could continue.
Price pressures intensified during the quarter. The preferred inflation measure increased 2.8%, up from 2.1% in the previous quarter. Analysts warned that higher prices hit lower and middle income households hardest. Higher income households continued to spend at a faster pace.
Oliver Allen, senior US economist at Pantheon Macroeconomics, said recent data showed consumers turning cautious. Surveys and credit card figures suggested slower spending. Allen said weak employment conditions, stagnant real incomes, and depleted pandemic savings now constrained households.
