Economy Grew 4.3% in Third Quarter, the Fastest Pace in Two Years

The U.S. economy grew at an annual rate of 4.3 percent in the third quarter, the strongest quarterly growth in two years, according to an estimate the Commerce Department’s Bureau of Economic Analysis released on Tuesday, CBS News and NBC News reported.

Economists had expected less. CBS News said analysts polled by FactSet forecast about 3 percent, and NBC News said economists surveyed by Dow Jones expected 3.2 percent. The report, delayed by the 43-day government shutdown, covers July through September. It compares with 3.8 percent growth in the second quarter, CBS News reported.

The bureau attributed the growth to increases in consumer spending, exports and government spending, while imports, which subtract from the total, decreased. CBS News reported that exports grew at an 8.8 percent rate and imports fell 4.7 percent. NBC News described a quarter with fewer new tariffs announced and shoppers buying back-to-school goods.

The details were less rosy on prices. The personal consumption expenditures index, a key inflation gauge, rose at a 2.8 percent annual rate in the quarter, up from 2.1 percent in the spring, and the core measure that excludes food and energy rose 2.9 percent, up from 2.6 percent, CBS News reported. Both are above the Federal Reserve’s 2 percent target. CBS News also noted that the labor market is a weak spot: unemployment rose to 4.6 percent in November, the highest since 2021, and hiring slowed in the second half of the year.

Consumer spending has increasingly split by income, NBC News reported, with wealthier households not changing their habits despite rising living costs and middle- and lower-income households cutting back amid a weaker job market, tariffs and inflation. “The economy continues to defy its doubters by chugging higher,” Bret Kenwell, an investment analyst at eToro, said in an email quoted by CBS News.

President Donald Trump credited his trade policy. “The TARIFFS are responsible for the GREAT USA Economic Numbers JUST ANNOUNCED,” he wrote on Truth Social, according to NBC News. Economists have given a more mixed account of tariffs: CBS News noted that consumer prices have not risen as much as many feared, with some retailers absorbing part of the added costs and others passing them on through higher prices.

Looking ahead, CBS News reported that economists expect growth to slow in the fourth quarter because of the shutdown. NBC News described the figure as an estimate and said that, “if confirmed,” it would be the best quarter of growth since the same period in 2023.