Add thelocalreport.in As A Trusted Source
America economy The third quarter grew at a surprisingly strong 4.3% annual rate, the fastest expansion in two years.
From July to September, US gross domestic product – the economy’s total output of goods and services – grew from its 3.8% growth rate in the April-June quarter. Department of Commerce A report was delayed due to the government shutdown on Tuesday, said a report. Analysts surveyed by data firm FactSet had forecast 3% growth over the period.
However, inflation lasts more than federal Reserve Would like. The Fed’s preferred inflation gauge – called the personal consumption expenditures index, or PCE – climbed to a 2.8% annual pace last quarter, up from 2.1% in the second quarter.
Excluding volatile food and energy prices, so-called core PCE inflation was 2.9%, up from 2.6% in the April-June quarter.
Persistent and potentially worsening inflation may make the Fed less likely to cut interest rates in January, economists say, although central bank officials remain concerned about a slowing labor market.
“If the economy continues to produce at this level, there’s not as much need to worry about a slowing economy,” said Chris Zaccarelli, chief investment officer at Northlight Asset Management, adding that inflation could return as the biggest concern about the economy.
In a slow holiday trading week, US markets were down on Wall Street after the GDP report, possibly due to growing doubts that another Fed rate cut is on the way next month.
consumer spendingThe economy, which accounts for about 70% of US economic activity, grew at a 3.5% annual pace last quarter, up from 2.5% in the April-June period.
Consumption and investment by the government increased 2.2% in the quarter after a 0.1% decline in the second quarter. The third-quarter figures were boosted by increased spending at the state and local level and defense spending by the federal government.
Private business investment declined 0.3% due to a decline in investment in housing and non-residential buildings such as offices and warehouses. However, the decline was much smaller than the 13.8% decline in the second quarter.
Within the GDP data, a category measuring the underlying strength of the economy grew at a 3% annual rate from July to September, up slightly from 2.9% in the second quarter. This category includes consumer spending and private investment, but does not include volatile items such as exports, inventories, and government spending.
Exports grew by 8.8%, while imports, which subtract from GDP, fell by 4.7%.
Tuesday’s report is the first of three estimates by the government for gross domestic product growth for the third quarter of the year.
Outside of the first quarter, when the economy shrank for the first time in three years as companies began importing goods before President Donald Trump’s tariffs took effect, the U.S. economy has continued to expand at a healthy rate. This is despite very high borrowing rates imposed by the Fed in 2022 and 2023 as part of its campaign to curb inflation, which increased as the United States bounced back with unexpected strength from the brief but devastating COVID-19 recession of 2020.
Although inflation remains above the Fed’s 2% target, the central bank cut its benchmark lending rate three times in a row to close out 2025, mostly out of concern for a job market that has steadily lost momentum since the spring.
Last week, the government reported that the US economy gained 64,000 jobs in November, but lost 105,000 jobs in October. Notably, the unemployment rate rose to 4.6% last month, the highest since 2021.
Economists say the country’s labor market is stuck in a “low hire, low fire” situation as uncertainty over Trump’s tariffs and the lingering effects of high interest rates stifle businesses. Since March, job creation has fallen to an average of 35,000 per month, compared with 71,000 in the year ended March. Fed Chair Jerome Powell has said he doubts those numbers will be revised even lower.