U.S. Economy Surges 4.3% in Q3, Far Exceeding Expectations

The U.S. economy expanded at a far faster pace than anticipated in the third quarter, driven primarily by resilient consumer spending, according to a delayed government report released Tuesday.

Gross domestic product rose at an annualized rate of 4.3% from July through September, well above the 3.2% increase economists had forecast, the Commerce Department said in its initial estimate of third-quarter growth.

Consumer spending — the backbone of the U.S. economy — accelerated sharply, rising 3.5% in the third quarter after a 2.5% increase in the prior period. Stronger exports and higher government spending also contributed to growth, while a smaller decline in private fixed investment reduced the overall drag on the economy.

The report was originally scheduled for release on October 30 but was postponed due to the government shutdown. It replaces the second GDP estimate that was set for late November. A final revision is still expected.

A closely watched measure of underlying demand, real final sales to private domestic purchasers, increased 3%, up slightly from the previous quarter. Federal Reserve officials often use this metric to assess the strength of consumer-driven growth.

Despite the robust expansion, inflation pressures remained elevated. The personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge, rose 2.8%, while core PCE — excluding food and energy — climbed 2.9%, both notably above the central bank’s 2% target. The chain-weighted price index, which accounts for consumer substitution behavior, surged 3.8%, exceeding forecasts by a full percentage point.

Markets showed little reaction to the data, as the figures reflect past economic conditions. Stock futures edged slightly lower, while Treasury yields remained elevated.

Corporate profits also posted a sharp rebound, jumping $166.1 billion, or 4.2%, in the third quarter — a dramatic improvement from the modest $6.8 billion increase recorded in the previous quarter.