The US economy picked up speed in the three months to September as consumer spending rose and exports recovered. Economic output expanded at an annual rate of 4.3%, well above expectations. Growth increased 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 described an economy shaped by shifting trade policies, immigration changes, persistent inflation, and reduced public spending. These pressures caused sharp swings in trade activity. Despite that volatility, overall momentum remained strong and exceeded many forecasts.
Strong performance defies forecasts
Aditya Bhave, senior economist at Bank of America, said the economy repeatedly defied pessimistic predictions since early 2022. He described conditions as highly resilient during an interview on a leading international business programme. Bhave said he expected that strength to continue in the coming months.
Most economists had predicted slower growth. Forecasts pointed to annual expansion of about 3.2% in the third quarter. The final results exceeded those expectations by a significant margin.
Household spending drives rebound
Consumer spending contributed most to growth. Household spending rose at a 3.5% annual rate, up from 2.5% in the previous quarter. Spending increased despite signs of a cooling labour market. Households allocated more funds to healthcare services.
Imports continued to fall and reduced their drag on growth. The decline reflected new taxes on goods entering the country announced earlier this year. Exports rebounded sharply after earlier weakness, surging 7.4%. Government spending also recovered, led mainly by higher defence outlays.
Investment and housing face challenges
Strong gains in consumption and trade offset slower business investment. Companies cut spending, including investment in intellectual property. The housing market remained under pressure from high interest rates. Elevated borrowing costs worsened affordability and reinforced supply constraints.
Michael Pearce, chief US economist at Oxford Economics, said the economy moved toward 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 steady expansion.
Inflation weighs on outlook
Donald Trump praised the figures on social media and said tariffs drove the strong performance. He faced criticism as consumer confidence fell and opinion polls showed dissatisfaction with his economic leadership. Analysts questioned whether the rapid pace of growth could last.
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 hit lower and middle income households hardest. 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 suggested slower spending. Allen said weak labour conditions, stagnant real incomes, and depleted pandemic savings now constrained households.
