Despite a large majority of Americans believing the economy is really bad, in the third quarter of the year the U.S. economy exploded with blistering 4.3% annualized growth. This increase is over double the 3.8% increase seen in the prior quarter, Q2 2023. This unexpected surge highlights a resilient economic landscape as the country navigates various challenges, including shifts in trade and immigration policies, alongside cuts to government spending.
That’s the fastest growth the US economy has seen over the last three months heading into September. Analysts pointed out that this was actually stronger than what was expected, driven mainly by a consumer spending comeback and improving exports. The consumer expenditure jumped at a 3.5% annualized rate. That would be a dramatic jump from the 2.5% increase measured in the second quarter. It’s not surprising that health care services are a higher priority than ever for many households. This change has played a large role in the recent spike in spending.
Consumer spending was the key driver as US exports increased by 7.4% in the third quarter. This remarkable recovery comes on the heels of a sharp drop off from the last quarter. This rebound is especially welcome since it reflects a growing demand for American goods and services overseas. The trend of decreasing imports into the US has continued. This alarming trend is a clear indication of the increasingly burdensome tax just passed on shipments coming into the country. President Donald Trump ordered these tariffs in the spring of this year. They are key pieces in a wider strategy to remake America’s trade relations.
Economic growth is in a staring contest with multiple headwinds. Main concerns are the impacts of shifting trade and immigration policies, as well as federal government austerity. A government shutdown earlier this year held up important data collection. Because of this, analysts were unable to get a true sense of economic performance.