The US economy grew at an unexpectedly strong pace of 4.3% in the third quarter — the highest rate in two years — according to a government report released Tuesday.
Vigorous consumer spending on services such as health care and products like recreational vehicles fueled the surge in the gross domestic product, which is comprised of the value of all goods and services produced across the economy, for the July through September quarter.
The inflation-adjusted annual rate of 4.3% marked an uptick from 3.8% growth the previous quarter and beat analyst expectations of 3.2% growth, according to economists polled by The Wall Street Journal.
President Trump took a victory lap in the wake of the report, crediting his tariff policy for the strong growth.
“The TARIFFS are responsible for the GREAT USA Economic Numbers JUST ANNOUNCED…AND THEY WILL ONLY GET BETTER! Also, NO INFLATION & GREAT NATIONAL SECURITY. Pray for the U.S. Supreme Court!!!” he wrote on Truth Social.
The new report from the Commerce Department was delayed by the recent federal government shutdown.
The figures mark the first official government estimate of third-quarter-economic growth, though they are being reported as the fourth quarter draws to a close.
Consumer spending — which grew 3.5% in the third quarter, compared to 2.5% the previous quarter — helped power the GDP surge.
Much of that spending came from upper-income households whose spending is closely tied to financial markets — which have seen record gains this year — noted Sung Won Sohn, a professor of finance and economics at Loyola Marymount University.
He called the report “a pleasant surprise” but urged caution, pointing out that a significant portion of the boost in consumer spending came from increased electric vehicle purchases ahead of the September expiration of tax credits for them.
Another factor driving the GDP boost was business investment in equipment and intellectual property, which includes spending related to artificial intelligence. That category went up at a 5.4% pace, according to the Commerce Department.
“We are seeing somewhat of a bubble in capital spending related to data centers,” Sohn told The Post.
Still, he stressed that the companies behind the investments — including Microsoft and Google — are financially strong, making the situation very different from the dot-com bubble of the early 2000s.
“It’s not built on thin air,” Sohn said of AI investment.
Some indicators in recent months have called the underlying strength of the economy into question.
The jobs market has struggled, with unemployment rising in November to 4.6% — the highest level in more than four years.
Retail sales have also slowed even as upper-income households continue to spend, causing some big businesses such as Home Depot to report weaker-than-expected earnings and outlooks.
Inflation has been a hot-button issue as it hovers above the Federal Reserve’s 2% target.
Complicating matters, the latest report for November showed that consumer prices rose a smaller-than-expected 2.7% from a year ago.
Economists were cautious about the figure, noting that it was distorted by data-collection challenges during the record 43-day government shutdown that ended in November.
The past year saw tumultuous changes in the US’ tariff policy. Still, dire predictions about their harm to the economy were not borne out, said Sohn, who’s also president of SS Economics, an economic consultancy.
“That scenario people talked about did not pan out,” he remarked.
The latest GDP figures put the average annual rate of economic growth at 2.5% since Trump returned to office in January.
That’s on par with the 2.4% average pace recorded last year, when former President Joe Biden was still in office.
National Economic Council Director Kevin Hassett echoed Trump’s remarks on the newest numbers.
“4.3% GDP growth is happening because of Trump’s policies, but Biden’s policies did things like reduce real incomes by $3,000,” Hassett, a frontrunner to become the next chair of the Federal Reserve, said Tuesday on CNN.
“That kind of stuff takes a while to repair,” he added. “And if you look at the 4.3% GDP number, you can see that we’re repairing it at record pace.”
Republican lawmakers joined in celebrating the economic growth.
“Under President Trump, America is growing, creating jobs, and WINNING again,” House Majority Leader Steve Scalise of Louisiana wrote on X.
