NEW: Trump Economy Officially Booming After Best GDP Report In Years

The U.S. economy roared ahead at a sizzling 4.3% annual rate in the third quarter, posting its strongest growth in two years despite a year marked by disruptions and political battles.

Gross domestic product, the government’s official measure of economic output, expanded briskly for a second straight quarter, federal officials reported Tuesday. The GDP report arrived two months late due to a government shutdown that delayed its release.

The strong summer showing followed a solid 3.8% growth rate in the spring, putting the economy on track to comfortably exceed 2% growth for the full year, depending on how the final weeks of the fourth quarter shake out. Economists expect growth to cool somewhat late in the year, in part because of damage tied to the shutdown.

Even so, growth of 2% or more would mark a notable win for an economy that spent much of the year battling inflation pressures, higher interest rates and trade-related uncertainty. The economy’s staying power also sets the stage for another year of solid expansion in 2026.

Consumers once again did much of the heavy lifting. Consumer spending, the main engine of the U.S. economy, climbed at a robust 3.5% annual rate in the third quarter, driven largely by purchases of recreational goods and vehicles.

Some of that spending appears to reflect households rushing to get ahead of tariff-driven price hikes, raising questions about how long the momentum can last. At the same time, consumers are increasingly directing their dollars toward necessities such as health care, car repairs and insurance rather than discretionary splurges, a shift that helps explain why consumer sentiment surveys remain gloomy.

Businesses also stepped up, with investment in equipment providing another major boost. Spending on information-processing equipment, particularly tied to artificial intelligence, jumped 8.4% in the third quarter. That surge helped offset weakness among more traditional manufacturers outside the tech sector.

Government spending rebounded after slipping in the spring, adding further support to growth.

The headline GDP number got an extra lift from a shrinking U.S. trade deficit. A lower deficit added 1.6 percentage points to the overall growth rate. At the same time, slower inventory accumulation weighed on GDP, as businesses produced fewer unsold goods.

Strip away the noise, and the underlying picture remains strong. Economists often look at a GDP measure that excludes trade, inventories and government spending to gauge core momentum. By that yardstick, the economy still grew at a healthy 3% pace.

The outlook for the fourth quarter is more mixed. Businesses have cut back production in response to softer sales and reduced demand linked to tariffs. A separate report on durable goods orders showed only a modest increase in October once transportation items were excluded.

Inflation also picked up speed. Prices rose at a 2.8% annual rate in the third quarter, up from 2.1% previously, with higher U.S. tariffs implemented by the Trump administration contributing to the summer uptick.

Big picture, the economy continues to shrug off challenges that many expected would trigger a downturn. Strong growth in the spring and summer more than offset a small contraction in the first quarter, putting the U.S. on track to grow at least 2% for the fourth straight year.

Consumer spending, buoyed by record stock market gains, and massive business investment in artificial intelligence have been key drivers. Many economists believe the U.S. could hit 2% growth again in 2026, beating the roughly 1.8% pace considered the long-term norm.

That strength, however, could complicate the Federal Reserve’s plans. “The report will greatly lessen the odds of a Fed rate cut on Jan. 28, and even adds some doubt about future moves,” said senior economist Sal Guatieri of BMO Capital Markets.

Looking ahead, the economy shows little sign of rolling over. “While worries surrounding the jobs market, tariffs, and inflation continue to swirl, the economy continues to defy its doubters by chugging higher,” said Bret Kenwell, U.S. investment analyst at eToro.

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