US economic growth accelerates to 4.3% in Q3, driven by strong consumer spending and exports, defying expectations despite inflation and trade policy changes.

economy, US economic growth, consumer spending, exports, inflation, 2026 outlook, business news

US Economic Growth Accelerates to Highest Rate in Two Years

By Natalie Sherman, Business Reporter

Impressive Third Quarter Gains for the US Economy

The world’s largest economy picked up significant speed in the third quarter of the year. According to the latest data, the US economic growth rate soared to an annualized 4.3%, a noticeable jump from the 3.8% seen in the previous quarter. This surge exceeded analyst expectations and marked the strongest quarterly expansion in two years.

The growth figures, delayed briefly due to a government shutdown, provide insight into an economy that has faced considerable pressures—ranging from changes in trade and immigration policies to persistent inflation and reductions in government spending. Despite these headwinds, the underlying momentum of the US economy remains remarkably robust, repeatedly outperforming predictions.

Expert Insights: A Resilient Performance

Aditya Bhave, senior economist at Bank of America, summarized the nation’s performance by stating, “This is an economy that has defied doom and gloom expectations basically since the beginning of 2022.” Speaking to the BBC’s Business Today programme, Mr. Bhave described the economy as “very, very resilient,” and expressed confidence that this positive trend would continue.

Key Drivers: Consumer Spending and Trade

The better-than-expected results were buoyed primarily by consumer spending, which climbed at an annual rate of 3.5% compared to 2.5% in the prior quarter. Household expenditure on healthcare services notably increased, contributing to the strong momentum even amid a slowing job market.

• Exports: After a sharp drop, exports rebounded powerfully, surging by 7.4%.
• Imports: Imports, which negatively affect GDP calculation, continued to fall. This trend followed a wave of tariffs on US-bound shipments as announced by President Donald Trump.
• Government Spending: A revival in government spending, especially on defence, helped further stimulate growth.

These factors more than compensated for ongoing challenges, such as reduced business investment and a housing market that continues to struggle with high interest rates and affordability issues.

For a deeper look at historical trends in US economic growth history, visit our analysis page.

Looking Ahead: What’s Next for the US Economy?

Michael Pearce, Chief US Economist at Oxford Economics, believes the economy is positioned well for 2026. He expects further stimulus from recent tax cuts and the Federal Reserve’s decision to lower interest rates. “Underlying measures are consistent with a solid expansion,” Pearce commented.

Former President Donald Trump attributed the economic gains to his tariff policies, celebrating the news on social media. However, some polls reflect lingering concerns over consumer confidence and dissatisfaction with economic management.

Inflation and Consumer Concerns

Inflation remains a key issue, with the Federal Reserve’s preferred measure, the personal consumption expenditures price index, increasing to 2.8% in Q3 from 2.1% previously. While upper-income households continue to spend freely, mid- and lower-income Americans are feeling the pinch from rising prices.

According to Oliver Allen, Senior US Economist at Pantheon Macroeconomics, credit card data and recent surveys indicate households may be curbing their spending. “The weak labour market, stagnant real incomes, and exhaustion of pandemic-era excess savings all seem finally to be catching up with households,” Allen warns.

For a global perspective on economic trends, visit the International Monetary Fund’s official data pages.

Conclusion: A Cautious but Optimistic Outlook

Despite global uncertainties, ongoing inflation, and challenges in the housing sector, the US economy has shown remarkable strength and resilience. As the nation approaches 2026, experts remain cautiously optimistic, crediting robust consumer activity and policy measures for sustaining momentum—and keeping future prospects bright.

Source: BBC News: US economy growth figures