US GDP expands at 4.9%

Forecasters expect cooling in the coming months as high rates, global risks weigh on economy

- Amara Omeokwe

U.S. economic growth surged this summer, as consumers boosted spending ahead of growing challenges that could limit their ability to maintain the momentum.

Gross domestic product grew at a seasonally and inflation-adjusted 4.9% annual rate in the third quarter, the Commerce Department reported Thursday. That was the fastest rate since late 2021 and much stronger than economists were anticipating just a few months ago. The economy expanded 2.1% in the second quarter.

This year's economic resilience could soon face tests, however. Rising long-term interest rates, wars in Ukraine and the Middle East and the possibilities of a partial government shutdown and prolonged labor strikes are all factors that could cause economic cracks to emerge.

The big reason for the summer's blowout growth: Americans stepped up spending, defying expectations they would pull back due to a series of interest-rate hikes from the Federal Reserve aimed at cooling inflation by slowing the economy. The economic acceleration, which was foreshadowed by strong hiring and retail data, won't change the Fed's plans to hold rates steady at their meeting next week. Consumer spending rose at an annual rate of 4.0% in the third quarter, jumping from a gain of 0.8% in the prior quarter and the largest increase since the fourth quarter of 2021.