The US economy gathered strong momentum during the three months to September as consumer spending increased and exports rebounded. Economic output expanded at an annual rate of 4.3%, well above expectations. Growth rose from 3.8% in the previous quarter and reached its fastest pace in two years.
The figures appeared after delays caused by a federal government shutdown. The report portrayed an economy shaped by shifting trade rules, immigration changes, stubborn inflation, and reduced public spending. These factors triggered sharp movements in trade flows. Despite that turbulence, overall economic momentum stayed firm and exceeded many forecasts.
Growth confounds pessimistic predictions
Aditya Bhave, senior economist at Bank of America, said the economy consistently overturned gloomy expectations since early 2022. He described current conditions as extremely resilient during an interview on a global business news programme. Bhave said he saw no clear reason for that resilience to weaken in the near term.
Many analysts had predicted slower growth. Forecasts suggested expansion of around 3.2% for the third quarter. The final figures surpassed those projections by a considerable margin.
Consumer spending leads the surge
Household spending delivered the strongest contribution to growth. Consumer spending increased at a 3.5% annual rate, up from 2.5% in the previous quarter. Spending rose despite signs of cooling in the labour market. Households directed more money towards healthcare services.
Imports continued to decline and reduced their drag on economic growth. The fall reflected new taxes on goods entering the country announced earlier this year. Exports rebounded sharply after previous declines and surged 7.4%. Government spending also recovered, driven largely by higher defence expenditure.
Investment and housing face headwinds
Strong gains in consumption and trade offset a slowdown in 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 problems and tightened supply constraints.
Michael Pearce, chief US economist at Oxford Economics, said the economy moved towards 2026 from a position of strength. He said tax cuts and recent interest rate reductions should support activity. Pearce added that underlying indicators pointed to a steady and sustainable expansion.
Inflation raises concerns about durability
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 persist.
Price pressures increased during the quarter. The preferred inflation measure rose 2.8%, compared with 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.
