WASHINGTON (AP) — Provided by Robust personal consumptionthe U.S. economy grew at the fastest pace in two years in the July-September period, the government said Thursday, revising its initial forecast slightly upward.
U.S. gross domestic product, the country’s output of goods and services, grew at an annualized rate of 4.4% in the third quarter, the Commerce Department reported Thursday. This was up from 3.8% in the April-June period and higher than the 4.3% growth the ministry had originally estimated. Economic growth has not accelerated since the third quarter of 2023.
Consumer spending, which accounts for 70% of US GDP, grew at a healthy pace of 3.5%. Spending on services such as health care increased by 3.6%, while spending on goods increased by 3%. Of this, so-called durable goods such as cars intended to be used for at least three years accounted for only 1.6%. A surge in exports and a decline in imports also contributed to strong growth in the third quarter.
Business investment (excluding homebuilding) rose 3.2%, partly reflecting bets on artificial intelligence.
The economy remains resilient despite uncertainty from President Donald Trump’s policies economic policyespecially his double-digit taxes on imports from nearly every country on earth.
Despite strong economic growth, many Americans are dissatisfied with the current state of the economy, especially the high cost of living.
The gap between how consumers feel and how much they are spending may reflect the so-called . K-shaped economy” Wealthy Americans are spending more and earning more through market gains and investment, while lower-income households are struggling with stagnant wages and high prices.
The job market also appears to be quite weak compared to the broader economy. Employers have added a lackluster 28,000 jobs per month since March. By contrast, the 2021-2023 employment boom after the coronavirus lockdown saw 400,000 jobs created per month. Still, the unemployment rate remains low at 4.4%, suggesting a no-hire, no-fire labor market in which companies are reluctant to hire new employees but are reluctant to let go of their current employees.
“The U.S. is experiencing an unemployment boom, with AI investment and wealthy spending supporting strong growth, but there are very few jobs,” said Heather Long, chief economist at Navy Federal Credit Union. “This is a worrying situation for many middle-class families.” One of the big questions in 2026 is whether the middle class will start to feel the euphoria of the boom. ”
