The US economy accelerated sharply during the three months to September as consumers spent more and exports recovered. The world’s largest economy expanded at a 4.3% annual rate, beating expectations. Growth improved from 3.8% in the previous quarter and reached its strongest pace in two years.
The delayed report emerged after a federal shutdown disrupted data releases. It described an economy shaped by trade shifts, immigration changes, persistent inflation, and lower public spending. These forces caused sharp swings in trade flows, yet overall momentum remained strong. The economy continued to outperform many earlier forecasts.
Economy defies pessimistic forecasts
Aditya Bhave, senior economist at Bank of America, said the economy repeatedly challenged negative expectations since early 2022. He described the economy as highly resilient during an interview on a leading international business programme. Bhave said he expected that resilience to continue in the coming period.
Analysts had expected slower growth in the third quarter. Most forecasts pointed to expansion near 3.2%. Actual growth exceeded those predictions by a wide margin.
Consumers and trade drive expansion
Consumer spending lifted growth significantly. Household spending rose at a 3.5% annual rate, up from 2.5% previously. Consumers increased healthcare spending despite a cooling labour market. That rise provided a major boost to overall output.
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 strongly after earlier weakness and surged 7.4%. Government spending also recovered, led by higher defence outlays.
Investment and housing remain weak
Stronger consumption and trade offset weaker business investment. Companies reduced spending, including investment in intellectual property. The housing market also struggled under still-elevated interest rates. High borrowing costs worsened affordability problems and reinforced supply constraints.
Michael Pearce, chief US economist at Oxford Economics, said the economy entered 2026 in a solid position. He said tax cuts and recent central bank rate reductions should support growth. Pearce added that underlying indicators pointed to a steady expansion.
Inflation risks cloud outlook
Donald Trump praised the figures on social media and credited tariffs for the performance. He faced criticism over falling consumer confidence and polls showing dissatisfaction with his economic management. Some analysts questioned whether growth could remain this strong.
Rising prices threatened household budgets. The preferred inflation gauge increased 2.8% during the quarter, up from 2.1% previously. Analysts warned that higher prices hit lower and middle income households hardest. Higher income households continued spending at a faster pace.
Oliver Allen, senior US economist at Pantheon Macroeconomics, said recent data showed caution among consumers. Surveys and credit card figures suggested slower spending. Allen said weak employment, flat real incomes, and depleted pandemic savings now pressured households.
