The United States economy roared to life during the third quarter of 2023, growing at a blistering annual rate of 4.3%. That’s the biggest increase in percentage terms in two years. This figure came in well above economists’ projections and speaks to the strong showing from the overall economy despite persistent headwinds. Consumer spending and exports both exploded, fueling the largest growth in decades. That took place even in the face of headwinds from trade policy changes and federal budget sequestration.
The quarterly growth rate of 4.3% from July through September comes on the heels of a robustly revised 3.8% growth rate in that same quarter. Analysts attribute this unpredictable increase to a perfect storm. First and foremost, a major driver was the 3.5% increase in consumer spending, largely driven by an increase in spending on health care services. US exports shot up by a staggering 7.4% over this period. This impressive jump emphasizes the increased demand for American-made products abroad.
Unfortunately, this year, the economy’s growth has tripped and fallen. With cuts in government spending and the impacts of new trade and immigration policies, the barriers have become formidable. There’s the problem of imports, hammering the market with a new tsunami of bills hitting import shipments. President Donald Trump first floated this measure in the spring. This policy has resulted in a decrease in imports. Putting too much of the burden on this front line, many economists have directed their ire towards this frontline.
For one thing, the economy certainly feels strong. As the job market begins to cool, concerns grow over possible permanent damage. Add to that increasing impatience from consumers with ongoing inflation that is still draining their purchasing power. The most recent government shutdown further delayed data collection, making it difficult to assess the general health of our economy.