Report: Unexpected US growth ends recession scare

By BEN SHIMKUS, US CONSUMER REPORTER

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The US economy grew faster than expected in the third quarter, according to a long-delayed government report released Thursday. Gross domestic product — a broad measure of economic activity — jumped by 4.3 percent from July through September, the Commerce Department said. That's a major acceleration from the prior quarter's 3.8 percent growth rate, and blows by expert predictions of 3.2 percent. Thursday's backwards-looking report is the strongest reading in two years.

The US economy grew faster than expected in the third quarter, according to a long-delayed government report released Thursday. Gross domestic product — a broad measure of economic activity — jumped by 4.3 percent from July through September, the Commerce Department said. That's a major acceleration from the prior quarter's 3.8 percent growth rate, and blows by expert predictions of 3.2 percent. Thursday's backwards-looking report is the strongest reading in two years.

'For the second straight quarter, US GDP came in well ahead of economists' expectations, reaffirming the resilience of the consumer and the economy,' Bret Kenwell, a US investment analyst at eToro, told the Daily Mail. 'While worries surrounding the jobs market, tariffs, and inflationcontinue to swirl, the economy continues to defy its doubters by chugging higher.' Overall, today's reading shows the economy is growing at a 2.5 percent yearly rate in President Donald Trump's first year in the White House, around the same as former President Joe Biden's 2.4 percent annual rate.

'For the second straight quarter, US GDP came in well ahead of economists' expectations, reaffirming the resilience of the consumer and the economy,' Bret Kenwell, a US investment analyst at eToro, told the Daily Mail. 'While worries surrounding the jobs market, tariffs, and inflationcontinue to swirl, the economy continues to defy its doubters by chugging higher.' Overall, today's reading shows the economy is growing at a 2.5 percent yearly rate in President Donald Trump's first year in the White House, around the same as former President Joe Biden's 2.4 percent annual rate.

The data was closely watched on Wall Street, in part because it offers the clearest snapshot yet of the economy's underlying momentum. The previous two GDP reports were distorted by the effects of Trump's trade policies. In the first quarter, GDP fell 0.6 percent, largely because businesses rushed to import foreign goods ahead of expected tariff hikes, inflating trade deficits and dragging down growth. The second quarter, by contrast, was artificially boosted by a sharp drop in imports, which temporarily lifted GDP.

The data was closely watched on Wall Street, in part because it offers the clearest snapshot yet of the economy's underlying momentum. The previous two GDP reports were distorted by the effects of Trump's trade policies. In the first quarter, GDP fell 0.6 percent, largely because businesses rushed to import foreign goods ahead of expected tariff hikes, inflating trade deficits and dragging down growth. The second quarter, by contrast, was artificially boosted by a sharp drop in imports, which temporarily lifted GDP.

The third quarter is the first period in which those trade effects appear to have largely stabilized, giving economists a cleaner read on how much Americans and US businesses are actually spending amid the trade wars. 'Now we're starting to see things level out, and just as they have for several years now, the US consumer continues to carry the baton for the economy,' Kenwell added. 'After two quarters of negative prints, government spending positively contributed to GDP as well.' Healthcare and automotive spending drove much of the summer and fall growth, with high-earning Americans shelling out top dollar for luxury products.

The third quarter is the first period in which those trade effects appear to have largely stabilized, giving economists a cleaner read on how much Americans and US businesses are actually spending amid the trade wars. 'Now we're starting to see things level out, and just as they have for several years now, the US consumer continues to carry the baton for the economy,' Kenwell added. 'After two quarters of negative prints, government spending positively contributed to GDP as well.' Healthcare and automotive spending drove much of the summer and fall growth, with high-earning Americans shelling out top dollar for luxury products.

Automakers, in particular, posted strong September sales, fueled by a surge in electric vehicle purchases as buyers moved quickly to secure the federal $7,500 EV tax credit before it expired. Still, the strong GDP print lands against a more complicated economic backdrop. Recent data have shown signs of cooling elsewhere in the economy, including a softening job market and uneven consumer spending, with growth increasingly concentrated among higher-income households. Retail sales in the last month decelerated further than experts expected, and some retailers — like Home Depot and Walmart — are showing signs of consumer strain during the holiday season.

Automakers, in particular, posted strong September sales, fueled by a surge in electric vehicle purchases as buyers moved quickly to secure the federal $7,500 EV tax credit before it expired. Still, the strong GDP print lands against a more complicated economic backdrop. Recent data have shown signs of cooling elsewhere in the economy, including a softening job market and uneven consumer spending, with growth increasingly concentrated among higher-income households. Retail sales in the last month decelerated further than experts expected, and some retailers — like Home Depot and Walmart — are showing signs of consumer strain during the holiday season.

Recent federal reports have only added to that uncertainty. Inflation data and job market readings released in recent weeks have surprised investors, prompting questions on Wall Street about whether official data is fully capturing shifts in the economy. While investors don't expect any foul play with the numbers, they have started calling the government's readings 'Swiss cheese,' according to Reuters, due to changes in data collection during the government shutdown.

Recent federal reports have only added to that uncertainty. Inflation data and job market readings released in recent weeks have surprised investors, prompting questions on Wall Street about whether official data is fully capturing shifts in the economy. While investors don't expect any foul play with the numbers, they have started calling the government's readings 'Swiss cheese,' according to Reuters, due to changes in data collection during the government shutdown.

Still, Thursday's reading of the economy during the fall continued a trend that companies have seen for several years: despite rapid price increases and worries about jobs, Americans kept spending. 'Data has remained more sparse than usual due to the government shutdown, but if consumers remain resilient through the holiday and the fourth quarter, it should bode well for US GDP and corporate earnings,' Kenwell added. 'Bulls are hoping to see this trend continue in 2026 as investors look for further upside.'

Still, Thursday's reading of the economy during the fall continued a trend that companies have seen for several years: despite rapid price increases and worries about jobs, Americans kept spending. 'Data has remained more sparse than usual due to the government shutdown, but if consumers remain resilient through the holiday and the fourth quarter, it should bode well for US GDP and corporate earnings,' Kenwell added. 'Bulls are hoping to see this trend continue in 2026 as investors look for further upside.'

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