WASHINGTON—The American economy expanded at a healthy 2.8 percent annual pace from July through September on strong consumer spending and a surge in exports, the government said Wednesday, leaving unchanged its initial estimate of third-quarter growth.
The Commerce Department reported that growth in U.S. gross domestic product—the economy’s output of goods and services—slowed from the April–July rate of 3 percent.
But the GDP report still showed that the American economy—the world’s largest—is proving surprisingly durable. Growth has topped 2 percent for eight of the last nine quarters.
Still, American voters—exasperated by high prices—were unimpressed by the steady growth and chose this month to return President-elect Donald Trump to the White House to overhaul the nation’s economic policies. He will be supported by Republican majorities in the House and Senate.
Consumer spending, which accounts for about 70 percent of U.S. economic activity, accelerated to a 3.5 percent annual pace last quarter, up from 2.8 percent in the April–June period and fasted growth since the first quarter of 2023. Exports also contributed to the third quarter’s growth, increasing at a 7.5 percent rate, most in two years. Still, the third-quarter growth in both consumer spending and exports was lower than the Commerce Department initially estimated.
But growth in business investment slowed sharply on a drop in investment in housing and in nonresidential buildings such as offices and warehouses. By contrast, spending on equipment surged.
When he takes office next month, Trump will inherit an economy that looks broadly healthy.
Growth is steady. Unemployment is low at 4.1 percent. Inflation, which hit a four-decade high 9.1 percent in June 2022, has fallen to 2.6 percent. That is still above the Federal Reserve’s 2 percent target, but the central bank felt satisfied enough with the 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.
The public still feels inflation’s sting: Prices are about 20 percent higher than they were in February 2021, just before inflation started picking up
Trump has promised an economic shakeup. On Monday, for example, he vowed to slap new import taxes on goods from China, Mexico, and Canada. Mainstream economists view such taxes—or tariffs—as inflationary. That is because they are paid by U.S. importers, who then seek to pass along the higher costs to their customers.
Wednesday’s report was the second of three looks at third-quarter GDP. The Commerce Department will issue the final report on Dec. 19.
By Paul Wiseman