The US economy accelerated in the three months to September as consumer spending increased and exports rebounded. Economic output expanded at an annual rate of 4.3%, well above forecasts. Growth rose from 3.8% in the previous quarter, reaching its fastest pace in two years.
The figures followed delays caused by a federal government shutdown. The report highlighted an economy shaped by changing trade policies, immigration shifts, persistent inflation, and lower public spending. These pressures caused sharp swings in trade activity. Despite the volatility, overall momentum remained strong and exceeded many predictions.
Resilience surprises economists
Aditya Bhave, senior economist at Bank of America, said the economy consistently defied pessimistic predictions 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.
Most economists had forecast slower growth. Predictions pointed to annual expansion of about 3.2% in the third quarter. The actual results exceeded those projections by a significant margin.
Consumer spending fuels growth
Household spending contributed the most to economic growth. Consumer spending rose at a 3.5% annual rate, up from 2.5% in the previous quarter. Spending increased even as the labour market showed signs of slowing. Households allocated more money toward healthcare services.
Imports continued to decline and reduced their drag on growth. The fall 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.
Business investment and housing face challenges
Strong gains in consumption and trade offset weaker 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 entered 2026 from a position of strength. He said tax cuts and recent interest rate reductions should support growth. Pearce added that underlying indicators continued to signal steady expansion.
Inflation casts shadow on growth
Donald Trump praised 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 persist.
Price pressures rose during the quarter. The preferred inflation measure increased 2.8%, up from 2.1% in the previous quarter. Analysts warned that higher prices weighed heavily on lower and middle income households. Higher income households continued spending 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.
