The US economy expanded at an inflation-adjusted annualized rate of 4.3% in the third quarter, marking its fastest growth in two years, according to data released Tuesday by the Commerce Department. The figure represents a clear acceleration from the 3.8% growth recorded in the second quarter, highlighting stronger economic momentum despite higher interest rates.
The report, although delayed due to the recent government shutdown, underscores the resilience of the US economy and may have implications for future Federal Reserve policy decisions.
Consumer Spending and Exports Drive Third-Quarter GDP Growth
The strongest contributors to third-quarter GDP growth were consumer spending and exports. Consumer spending, which represents roughly two-thirds of US economic activity, rose at an annualized rate of 3.5%, up from 2.5% in the previous quarter. The increase suggests households continued to spend at a healthy pace, even as borrowing costs remained elevated and inflation pressures persisted.
Exports also rebounded sharply, growing at an annualized rate of 8.8%, compared with a 1.8% contraction in the second quarter. The turnaround reflects improved global demand for US goods and services, along with easing supply-chain disruptions that had previously weighed on trade activity.
Together, stronger domestic consumption and improved export performance more than offset the drag from tighter financial conditions, reinforcing signs of underlying economic strength.
Federal Reserve May Face Less Pressure to Cut Rates
Although the GDP data is backward-looking, the stronger-than-expected growth could reduce the urgency for the Federal Reserve to cut interest rates when policymakers meet next month. A solid expansion suggests the economy may be able to withstand restrictive monetary policy for longer, allowing the central bank to remain cautious as it monitors inflation trends.
Market participants interpreted the data as largely in line with expectations. Stock futures showed limited movement following the release, indicating the report did not significantly alter investor outlooks.
Markets React Cautiously to GDP Report
Following the data release, Dow futures fell about 40 points, while S&P 500 futures declined 0.06%. Nasdaq 100 futures slipped 0.08%, reflecting a muted market reaction as investors continued to weigh economic strength against the outlook for interest rates.
Overall, the third-quarter GDP report highlights a resilient US economy, even as uncertainty remains around inflation, monetary policy, and global growth conditions.
