The U.S. economy expanded at a faster pace than anticipated during the third quarter, recording a 4.3% annualized growth rate, according to federal government data released Tuesday, Baltimore Chronicle with reference to Commerce Department reports. This growth represents an acceleration from the 3.8% increase registered in the previous quarter and occurred despite concerns about slow hiring and households facing tighter budgets.
The surge in gross domestic product (GDP) over the three months ending in September was primarily driven by stronger consumer spending, which constitutes roughly two-thirds of overall U.S. economic activity. The Commerce Department highlighted that rising consumer demand played a central role in propelling the economy forward. Additionally, the GDP calculation reflected an increase in exports and a reduction in imports, partly influenced by tariffs implemented earlier this year.
Consumer activity was evident across retail sectors, as households continued purchasing goods and services, despite inflation pressures that have increased the cost of living. The government’s GDP formula subtracts imports to focus on domestic production, emphasizing the role of U.S.-based economic activity in the overall growth figure.
The robust Q3 growth occurred even as the labor market showed signs of slowing. Employment gains have moderated in recent months, with the unemployment rate rising to 4.6% in November from 4.4% in September, marking the highest level since 2021, though still low by historical standards. Concurrently, inflation has remained nearly a percentage point above the Federal Reserve’s 2% target, complicating policy decisions.
The Fed has responded by adjusting interest rates to manage both employment and price stability. Earlier in December, it lowered the benchmark rate by a quarter percentage point in an effort to stimulate hiring. This marked the third rate cut of the year, bringing the federal funds rate to a range of 3.5% to 3.75%. While rates have declined from the peak reached in 2023, borrowing costs remain substantially above the near-zero levels set at the start of the COVID-19 pandemic.
Earlier we wrote that Trump Takes Economic Agenda on the Road Amid Low Approval Ratings, Polls Show.
