The U.S. economy expanded at a strong 4.3% annualized rate in the third quarter, according to data released by the U.S. Commerce Department, significantly outperforming market expectations. Economists had forecast gross domestic product growth of around 3.2% for the July–September period.
The GDP report was delayed by nearly two months due to the federal government shutdown. By comparison, the U.S. economy grew at a 3.8% annual rate in the second quarter.
Tatiana Darie, a macro markets strategist at Bloomberg, said the data showed solid underlying momentum despite being backward-looking. She noted that signs of a resilient consumer ahead of the shutdown-related disruptions were reassuring, adding that bond markets reacted positively to the strength in the report.
Broader third-quarter data pointed to firmer demand and renewed inflation pressures. Personal consumption expenditures rose at a 3.5% annualized pace, accelerating from 2.5% in the previous quarter and highlighting continued strength in household spending.
Inflation indicators also picked up. The GDP price index climbed to 3.8%, up from 2.1% in the prior quarter, while core personal consumption expenditures inflation rose to 2.9% from 2.6%. The figures suggest underlying price pressures increased as economic growth strengthened.
In contrast, data on manufacturing showed some softness. Durable goods orders fell 2.2% month over month, according to the U.S. Census Bureau, exceeding expectations for a 1.5% decline and pointing to a sharper pullback in demand for long-lasting manufactured items.
Despite the upside surprise in growth, analysts said the implications for monetary policy may be limited. Ali Jaffery of CIBC described the GDP report as better than expected but said it is unlikely to significantly alter the outlook for the Federal Reserve.
