The US economy gained fresh momentum during the three months to September as consumers increased spending and exports recovered. Economic output expanded at an annual rate of 4.3%, well above expectations. Growth rose from 3.8% in the previous quarter and reached the strongest level in two years.
The data appeared after delays caused by a federal government shutdown. The report depicted an economy shaped by shifting trade policies, immigration changes, persistent inflation, and reduced public spending. These pressures caused sharp fluctuations in trade activity. Despite that volatility, the wider economy kept solid momentum and outperformed many forecasts.
Economic strength surprises analysts
Aditya Bhave, senior economist at Bank of America, said the economy repeatedly overturned pessimistic assumptions since early 2022. He described current conditions as extremely resilient during an interview on an international business programme. Bhave said he expected that strength to remain intact over the coming months.
Many economists had expected weaker growth. Forecasts pointed to an annual expansion of about 3.2% in the third quarter. The actual figures exceeded those predictions by a wide margin.
Household spending drives expansion
Consumer spending delivered the largest contribution to economic growth. Household spending rose at a 3.5% annual rate, compared with 2.5% in the previous quarter. Spending increased even as the labour market showed signs of cooling. Households directed more money toward 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, driven largely by higher defence outlays.
Investment and housing remain pressured
Strong gains in consumption and trade offset slower business investment. Companies reduced spending, including investment in intellectual property. The housing market remained under strain from elevated interest rates. High borrowing costs worsened affordability challenges 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 continued to signal steady expansion.
Inflation casts shadow over outlook
Donald Trump celebrated the figures on social media and said tariffs powered the strong performance. He faced criticism as consumer confidence weakened and opinion polls showed dissatisfaction with his economic leadership. Some analysts questioned whether the rapid pace of growth could endure.
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 figures pointed to slower spending. Allen said weak labour conditions, stagnant real incomes, and depleted pandemic savings now weighed on households.
