In the Q3 of this year, the entire American economy roared back at a record annualized rate of 4.3%. That’s right — this growth is the strongest performance we’ve seen in two years! This number is even higher than last quarter’s growth rate of 3.8%. Even more encouraging, it reflects a fantastic bounceback despite continued headwinds like trade policy uncertainty, the administration’s immigration crackdown and cuts to federal spending.
The economy continues to improve, largely due to drastic swings in trade and immigration policy. One major reason has been the tariffs President Donald Trump slapped on the industry earlier this spring. As a result, these tariffs have led to a near-total collapse of imports. American businesses are unfortunately left to navigate this increasingly unpredictable and changing trade environment.
Exports from the United States exploded by an astounding 7.4% in the third quarter. This historic surge is a reflection of extraordinary demand for American goods overseas and that’s a good thing. U.S. exporters themselves are fighting hard and intelligently against an ever-changing global market landscape. In other words, their surge in exports has more than done the trick in counterbalancing the relatively bad news from decreased imports.
Consumer spending jumped at an annual rate of 3.5% in the past quarter. This growth was largely driven by increased spending on healthcare services. Consumer spending, especially with inflation running hot, is of great importance. This trend is seen amid a cooling job market and continued fears of elevated inflation. The small businesses we work with have had to deal with the most recent government shutdown, which has disrupted data collection efforts by the U.S. government. Consumer spending has proven resilient, reflecting a strong underlying demand.
Higher consumer spending along with increased exports has driven an unexpected surge in economic performance. So far, the third quarter has beat expectations. The U.S. economy has shown miraculous flexibility. All of this is particularly remarkable considering the headwinds, such as austerity on the federal level, that typically drag on economic expansion.