The US economy expanded at an impressive annual rate of 4.3% during the third quarter of 2023, marking the strongest growth seen in two years. This growth rate represents an impressive jump from last quarter’s revised rate of 3.8%. Analysts largely attribute the economic resurgence to robust consumer spending. They further celebrate a rebound in their exports, together a twin engine that has powered the economy forward.
Consumer spending, the most important indicator of economic success, is up at an annual rate of 3.5% for the third quarter. This boost exceeded the 2.5% growth rate that was previously reported last quarter, signaling a strong return of confidence from consumers. Experts suggest that a notable portion of this spending boost stems from increased expenditures on health care services, as individuals navigate changes in policy and seek necessary medical attention.
Exports not only surged, but positively contributed to overall growth as well. After dramatic drops in previous months, they bounced back by 7.4%. This turnaround is especially remarkable considering the backdrop of recent, disruptive trade policies enacted by the federal government. In the spring, President Donald Trump floated new tariffs on imports entering the country through sea ports. This development has fundamentally disrupted trade patterns and drastically reduced imports.
Imports experienced a drop during this time, indicating the effects of these new tariffs. Imports are down over seventy percent attributable to the fact that we’ve raised their taxes prohibitive on goods sold into the US market. This represents a big reversal in the direction of trade balances as domestic consumption patterns shape up.
Even with these ups and downs in trade and consumer spending, the strong growth of the US economy overall surprised analysts. The latest report on economic performance came amidst challenges posed by government shutdowns, which had previously delayed data collection and analysis. In addition to these factors, continued cuts to government spending and a radical shift in immigration policy have further affected the economic environment.