The U.S. economy showed unexpected strength in the third quarter, growing at its fastest pace in two years and defying concerns about consumer confidence and inflation.
The Commerce Department released data showing inflation-adjusted gross domestic product (GDP) growth at a healthy 4.3% annualized rate from July to September.
This acceleration marks a significant jump from the 3.8% growth recorded in the second quarter and far exceeds the forecasts of most economists.
This increase is attributed to the following main factors:
Resilient consumer spending
The newly released report indicates that the resilient American consumer is the main driver of growth. Consumer spending, which accounts for about two-thirds of economic activity, accelerated to a pace of 3.5%, up from 2.5% in the previous quarter.
Additionally, spending remains robust across all categories, highlighting widespread consumer confidence in daily economic activity.
Strong rebound in exports
A major development factor was the rebound in exports. They had fallen by -1.8% in the second quarter, so the rebound largely contributed to the overall acceleration in GDP.
This turnaround reflects stronger global demand for U.S. goods and services, accompanied by beneficial changes in trade flows and supply chains driven by recent trade policy adjustments.
Increase in public spending
The report highlights that increased defense spending contributed to electricity growth in the middle of the year. Analysts note that federal government spending plays a direct role in boosting the economy.
Additionally, consistent spending at other levels of government has also established a stable foundation.
Higher business profits
After virtually stagnating in the second quarter (up just $6.8 billion), corporate profits rebounded strongly. This speaks to the sustained pricing power and operational efficiencies of companies, which supports future investment and wage growth potential.
The underlying strength of the private sector
A key measure of domestic demand, which combines private investment and household consumption, remained stable. This shows that the growth was not a statistical fluke but reflected real underlying economic dynamics.
In short, the third quarter rise is not due to a single factor, but to the confluence of a conjunction of resilient U.S. consumers (especially in the high-end segment), a booming export sector, active government spending and healthy corporate profits, creating the picture of an overperforming economy despite persistent inflationary pressures.
