The US economy grew at its fastest pace in two years during the third quarter, according to revised government data released on Thursday, as strong consumer spending and a boost from trade offset signs of strain in the labour market.
Gross domestic product expanded at a 4.4% annual rate between July and September, the Commerce Department said.
The revised figure marked a slight upgrade from the initial 4.3% estimate and followed growth of 3.8% in the previous quarter.
The economy has not recorded a stronger pace of expansion since the third quarter of 2023.
Consumer spending underpins expansion
Household spending, which makes up about 70% of US economic activity, rose at a healthy 3.5% pace during the quarter.
Outlays on services, including healthcare, travel and recreation, increased by 3.6%, while spending on goods rose by 3%.
Within goods, purchases of durable items such as cars and household appliances rose just 1.6%, suggesting consumers remained cautious on big-ticket purchases even as overall spending stayed resilient.
Trade also contributed to growth, as exports climbed and imports declined, lifting net exports and adding to headline GDP.
Business investment supported by technology
Business investment excluding residential construction increased at a 3.2% annual rate, reflecting continued spending on technology and automation.
Economists said investment linked to artificial intelligence remained a key driver, helping firms boost productivity despite uncertainty over the broader policy environment.
The strong growth came even as President Donald Trump’s economic agenda, including sweeping tariffs on imports from most major trading partners, has weighed on business confidence.
So far, those policies have not derailed overall output.
Uneven recovery weighs on sentiment
Despite the upbeat growth figures, many Americans remain dissatisfied with the state of the economy, particularly due to the cost of living.
Analysts say the contrast between robust spending data and weak public sentiment reflects an increasingly uneven recovery.
Higher-income households have benefited from rising asset prices and investment income, supporting consumption, while lower-income families continue to struggle with limited wage growth and elevated prices.
Jobs growth lags output
The labour market has not kept pace with economic expansion.
Employers have added an average of just 28,000 jobs a month since March, a sharp slowdown from the roughly 400,000 monthly gains recorded during the post-pandemic hiring boom between 2021 and 2023.
Still, the unemployment rate remains low at 4.4%, pointing to a labour market where companies are reluctant to hire but also hesitant to lay off workers.
Heather Long, chief economist at Navy Federal Credit Union, described the situation as a “jobless boom,” warning that the benefits of growth have yet to reach many middle-class households.
Thursday’s release also reflected ongoing disruptions to government data reporting following last year’s federal shutdown, which halted statistical work for several weeks.
As a result, the revised figures effectively serve as the final reading for third-quarter GDP.
The post US economy grows at fastest pace in two years as consumer spending and trade lift GDP appeared first on Invezz
