The U.S. economy showed stronger-than-expected growth in the third quarter. Contrary to concerns that tariff imposition and a slowdown in hiring would curb spending, personal consumption held up, and higher exports along with lower imports also lifted the growth rate.
The U.S. Department of Commerce said on the 23rd (local time) that the third-quarter gross domestic product (GDP) growth rate was tallied at an annualized 4.3% from the previous quarter. It was the highest level in two years since the third quarter of 2023 and far exceeded market expectations.
The United States releases quarter-over-quarter growth rates on an annualized basis. The economy contracted in the first quarter due to a recoil from import expansion ahead of tariff imposition, rebounded in the second quarter, and then accelerated further in the third quarter.
The driver of third-quarter growth was personal consumption. Personal consumption rose 3.5%, contributing 2.39 percentage points to growth. Consumption showed resilience, led by services.
Private investment fell 0.3%, edging lower. The pattern of a surge in the first quarter due to inventory buildup ahead of tariff implementation followed by a sharp drop in the second quarter appears to have stabilized in the third quarter.
Net exports added 1.59 percentage points to the growth rate. The impact reflected exports rising 8.8% while imports fell 4.7%.
Government spending increased 2.2%, adding 0.39 percentage points to the growth rate. The private spending growth rate, which shows the underlying trend of the U.S. economy, was tallied at 3.0%, a sign that demand remains solid.
The third-quarter GDP release was delayed by the federal government shutdown. The Department of Commerce said the figures replace the originally scheduled advance and preliminary estimates.