The U.S. economy grew at a surprisingly strong 4.3% annual rate in the third quarter, the most rapid expansion in two years, as government and consumer spending, as well as exports, all increased.
U.S. gross domestic product from July through September—the economy’s total output of goods and services—rose from its 3.8% growth rate in the April-June quarter, the Commerce Department said Tuesday in a report delayed by the government shutdown. Analysts surveyed by the data firm FactSet forecast growth of 3% in the period.
However, inflation remains higher than the Federal Reserve would like. The Fed’s favored inflation gauge—the personal consumption expenditures index, or PCE—climbed to a 2.8% annual pace last quarter, up from 2.1% in the second quarter.
Excluding volatile food and energy prices, so-called core PCE inflation was 2.9%, up from 2.6% in the April-June quarter.
Economists say that persistent and potentially worsening inflation could make a January interest rate cut from the Fed less likely, even as central bank officials remain concerned about a slowing labor market.
