The U.S. economy registered steady growth in the third quarter, expanding at an annualised rate of 2.8%, slightly below the 3.1% forecast.
The pace of growth, though slower than expected, was buoyed by resilient consumer spending and strong federal government expenditure, according to a Commerce Department report released on Wednesday.
Despite elevated interest rates, gross domestic product (GDP) growth held steady, underscoring the U.S. economy’s resilience. Personal consumption expenditures, a key indicator of consumer activity, rose 3.7% in the third quarter — the highest since Q1 of 2023 — contributing nearly 2.5 percentage points to the GDP. Federal government spending surged by 9.7%, driven largely by a 14.9% increase in defense outlays, adding 0.6 percentage points to the growth figure.
The report indicated a robust economic performance that has countered predictions of a post-Covid slowdown. However, a sharp rise in imports, which jumped 11.2%, offset some growth gains, as did an 8.9% increase in exports.
The mixed economic news comes as the Federal Reserve is expected to lower interest rates further in its upcoming November meeting, even with inflation moderating.
Meanwhile, ADP employment data revealed private job growth of 233,000 in October, far exceeding expectations.