The U.S. economy expanded more than economists expected during the latest three-month period, reporting strong growth despite concerns about slowing hiring and cash-strapped shoppers, federal government data showed Tuesday.
The US economy grew at an annual rate of 4.3% in the third quarter in the government’s preliminary estimate, representing an acceleration from the 3.8% growth recorded in the previous quarter.
The US Commerce Department said increased consumer spending helped drive the economic increase in gross domestic product over the three months ending in September. Consumer spending, which accounts for about two-thirds of U.S. economic activity, is a leading indicator of the country’s economic outlook.
The GDP reading stems in part from higher exports and lower imports, which may have been caused by tariffs issued by President Donald Trump earlier this year.
A person browses racks of clothing inside a Macy’s department store in Towson, Maryland, December 10, 2025.
Stephanie Scarbrough/AP
The government’s GDP formula subtracts imports in an attempt to exclude foreign production from calculating total goods and services.
Strong economic growth in the third quarter appeared to defy concerns about a slowing labor market, which some observers saw as a warning sign for the broader economy.
Hiring has slowed sharply in recent months. The unemployment rate rose to 4.6% in November from 4.4% in September. Unemployment remains low by historical standards but has risen to its highest level since 2021.
Meanwhile, inflation remained about a percentage point above the Federal Reserve’s target rate of 2%.
These circumstances have put the Fed in a bind, as the central bank must balance a dual mandate to keep inflation under control and maximize employment. To address pressures on both goals, the Fed primarily maintains one tool: interest rates.
Earlier this month, the Federal Reserve cut its benchmark interest rate by a quarter of a percentage point in an effort to boost employment. This step represents the third interest rate reduction this year, bringing the Federal Reserve’s benchmark interest rate to a level ranging between 3.5% and 3.75%.
Interest rates have fallen significantly from their last peak in 2023, but borrowing costs remain well above the 0% rate set at the start of the Covid-19 pandemic.
