The US economy is growing at its fastest pace in two years

The U.S. economy accelerated in the three months to September, as consumer spending surged and exports rose.

The world’s largest economy grew 4.3% annually, up from 3.8% in the previous quarter. This is better than expected and the strongest growth in two years.

The report, which had been delayed by the U.S. government shutdown, highlights an economy that has been rocked by sweeping changes in trade and immigration policies, as well as persistent inflation and cuts in government spending.

But while this has led to sharp swings in some areas, such as imports and exports, the underlying economy has maintained strong momentum, beating many forecasts.

“This is an economy that has defied pessimistic expectations since the start of 2022,” said Aditya Bhave, senior economist at Bank of America.

Speaking to the BBC’s Business Today programme, Mr Bhave described the economy as “very, very resilient”.

“I don’t see why this wouldn’t continue,” he added.

The overall growth figure for the third quarter of the year was much stronger than expected, with most analysts expecting an annual pace of around 3.2%.

It was driven by consumer spending which increased at an annual rate of 3.5%, compared to 2.5% in the previous quarter, despite a slowing labor market, as households spent more on health services.

Imports, which weigh on growth, continued to fall, reflecting the wave of taxes on shipments entering the United States announced this spring by President Donald Trump.

At the same time, exports, which had fallen sharply, rebounded, increasing by 7.4%. Public spending has also rebounded, driven by defense spending.

These gains helped overcome a slowdown in business investment, particularly in intellectual property, and a real estate market grappling with persistently high interest rates, which have increased affordability concerns and supply constraints.

Michael Pearce, chief U.S. economist at Oxford Economics, said the economy is well positioned heading into 2026 as it begins to feel the boost from tax cuts and recent moves by the U.S. central bank to lower interest rates.

“The underlying metrics are consistent with solid expansion,” he said.

However, some analysts have warned that the rising prices faced by some households could make it difficult to maintain the unusually strong pace of growth seen in the most recent quarter.

In the three months to September, the Fed’s preferred inflation gauge, the Personal Consumption Expenditures Price Index, rose 2.8%, up from 2.1% in the previous quarter, according to the report.

Analysts have warned that these price increases are weighing on low- and middle-income households, even as higher-income households continue to spend freely.

Oliver Allen, senior U.S. economist at Pantheon Macroenomics, noted that some more recent surveys and credit card data suggest households are curbing their spending.

“A weak labor market, stagnant real incomes and the depletion of pandemic-era excess savings all appear to be finally catching up with households,” he said.