The US economy grew at its fastest pace in two years during the third quarter of this year, driven by strong consumer spending and a sharp rebound in exports. However, this momentum appears to have slowed amid rising living costs and the recent government shutdown.
The Bureau of Economic Analysis, part of the US Department of Commerce, reported in its preliminary estimate of third-quarter GDP that the gross domestic product (GDP) grew at an annualized rate of 4.3% in the last quarter, the fastest growth rate since the third quarter of 2023.
According to CNN, the stronger-than-expected increase in GDP during the last quarter, announced by the Commerce Department last night, reflects continued business investment in equipment and artificial intelligence. Government spending, mostly on defense, also contributed to this growth.
Inventories and residential spending, which includes home construction and sales, were the only factors that negatively impacted GDP. The increase in consumer spending was the fastest in nearly a year, as households spent generously on recreational goods, vehicles, and international travel.
Consumer spending also rose by 3.5% in the third quarter, marking its strongest growth rate since the fourth quarter of 2024, after growing by 2.5% during the period from April to June.
