WASHINGTON — The American economy expanded at a healthy 2.8% annual pace from July to September strong consumer spending and rising exports, the government said on Wednesday, leaving its initial estimate of third-quarter growth unchanged.
U.S. gross domestic product — the goods and services economy — slowed from a 3 percent rate in April to July, the Commerce Department reported Wednesday.
But the GDP report still showed the American economy — the world’s largest — proving surprisingly resilient. Growth has been 2% in eight of the last nine quarters.
Within the GDP data, a category that measures the underlying strength of the economy grew at a robust annual rate of 3.2% from July to September, up from 2.7% in the April-June quarter. This category includes consumer spending and private investment, but excludes volatile items such as exports, inventories, and government spending.
However, American voters – alarmed by high prices – were not impressed by the continued growth and this month decided to return Donald Trump to the White House. renewing the nation’s economic policies. He will have the support of the Republican majorities in the House and Senate.
Consumer spending, which accounts for about 70% of US economic activity, accelerated to an annual pace of 3.5% last quarter, up from 2.8% in the April-June period and the fastest growth since the fourth quarter of 2023. Exports also contributed in the third. quarterly growth, increasing at a rate of 7.5%, the most in two years. However, growth in the third quarter, both in consumer spending and in exports, was lower than the Department of Commerce initially predicted.
But growth in business investment slowed significantly as investment in housing and non-residential buildings such as offices and warehouses declined. On the contrary, expenditure on equipment increased.
When he takes office next month, President-elect Trump will inherit a healthy-looking economy.
Growth is stable. Unemployment is low, at 4.1%. Inflation, which reached a four-decade high of 9.1% in June 2022, has fallen to 2.6%. That’s still above the Federal Reserve’s 2% target, but the central bank felt satisfied enough with progress against inflation to cut its benchmark interest rate in September and again this month. Most Wall Street traders expect the Fed to cut rates again in December.
Wednesday’s report also contained some encouraging news on inflation. The Federal Reserve’s gauge of inflation – called the personal consumption expenditures index, or PCE – rose at an annual rate of 1.5% last quarter, down from 2.5% in the second quarter. Excluding volatile food and energy prices, core PCE inflation was 2.1%, down from 2.8% in the April-June quarter.
The public is still feeling the bite of inflation: prices are about 20% higher than they were in February 2021, before inflation started to pick up.
Trump has promised an economic shakeup. On Monday, for example, he vowed to impose new import duties on goods from China, Mexico and Canada. Major economies consider taxes or tariffs to be inflation. That’s because US importers pay them, and then want to pass the higher costs on to their customers.
Wednesday’s report was the second of three surveys on third-quarter GDP. The Department of Commerce will issue its final report on December 19.
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This story has been corrected to show that consumer spending rose at its fastest pace since the fourth quarter of 2023, not the first quarter.
