The US economy gained strong momentum in the three months to September as consumer spending increased and exports recovered. Economic output expanded at an annual rate of 4.3%, well above forecasts. Growth rose from 3.8% in the previous quarter and reached the fastest pace in two years.
The data arrived after delays caused by a federal government shutdown. The report described an economy shaped by shifting trade policies, immigration changes, persistent inflation, and lower public spending. These pressures triggered sharp swings in trade activity. Despite that volatility, overall momentum remained robust and outperformed many predictions.
Economic resilience surprises analysts
Aditya Bhave, senior economist at Bank of America, said the economy repeatedly defied pessimistic forecasts since early 2022. He described conditions as highly resilient during an interview on a major international business programme. Bhave said he expected that strength to continue in the coming months.
Many economists had predicted slower growth. Forecasts pointed to annual expansion of around 3.2% for the third quarter. The final results surpassed those expectations by a significant margin.
Household spending drives the rebound
Consumer spending delivered the largest boost to growth. Household spending rose at a 3.5% annual rate, up from 2.5% in the previous quarter. Spending increased despite signs of cooling in the labour market. Households devoted more funds to healthcare services.
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 previous weakness, surging 7.4%. Government spending also recovered, led mainly by higher defence outlays.
Investment and housing face headwinds
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 tightened supply constraints.
Michael Pearce, chief US economist at Oxford Economics, said the economy approached 2026 from a position of strength. He said tax cuts and recent interest rate reductions should support activity. Pearce added that underlying indicators remained consistent with steady expansion.
Rising inflation casts caution
Donald Trump welcomed 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. 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 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.
