WASHINGTON (Realist English). The US economy expanded at a robust 4.3% annual rate in the third quarter, marking its fastest pace of growth in two years and exceeding market expectations, according to data released Tuesday by the US Commerce Department.
Gross domestic product rose sharply from a 3.8% growth rate in the April–June period, beating forecasts of around 3%, as gains in consumer spending, government expenditure and exports more than offset a decline in private investment.
The strong growth comes despite inflation remaining above the comfort zone of the Federal Reserve. The Fed’s preferred inflation measure, the personal consumption expenditures (PCE) index, accelerated to a 2.8% annual pace in the third quarter from 2.1% previously. Core PCE inflation, which excludes food and energy, rose to 2.9% from 2.6%.
Economists said the combination of resilient growth and stubborn inflation could reduce the likelihood of a near-term interest rate cut, even as policymakers monitor signs of cooling in the labor market.
Consumer spending, which accounts for roughly 70% of US economic activity, grew at a 3.5% annual rate, up from 2.5% in the previous quarter. Government consumption and investment rebounded to 2.2% growth after contracting in the second quarter, driven by higher state and local spending and increased federal defense outlays.
Private business investment fell 0.3%, reflecting weaker spending on housing and nonresidential structures such as offices and warehouses, though the decline was far smaller than the steep drop recorded earlier in the year.
Exports surged at an 8.8% pace, while imports fell 4.7%, providing an additional boost to headline growth. A measure of underlying economic strength—excluding volatile components such as trade, inventories and government spending—expanded at a solid 3% annual rate.
Financial markets reacted cautiously, with US stocks edging lower amid doubts that the Fed will move quickly to ease policy. Analysts warned that if growth remains at current levels, inflation risks could once again dominate the economic outlook.
The GDP figures are the first of three official estimates for the quarter and underline the economy’s resilience despite higher borrowing costs and trade-related uncertainty. While inflation has eased from post-pandemic peaks, it remains above the Fed’s 2% target, keeping policymakers cautious as they balance price stability against a labor market that has shown signs of slowing in recent months.