US economy expands by 4.3% in third quarter driven by healthcare spending

The US economy recorded strong growth in July, August, and September, supported by steady consumer spending, particularly in healthcare services.

According to a statement made by the Department of Commerce on Tuesday, gross domestic product, the broadest measure of the country’s economic activity, grew at an annual rate of 4.3% in the third quarter, performing well above the 3.8% growth recorded between April and June.

Growth has accelerated since the early months of 2025—when the US economy contracted at an annual rate of 0.6%—as US President Donald Trump prepared comprehensive global tariffs.

Tuesday’s report was originally scheduled to be released at the end of October but was delayed due to the historic government shutdown.

Third-quarter data shows a decline in business and housing investments. However, spending by state and local governments increased.

The effects of trade fluctuations painted a more mixed picture in the latest report compared to earlier in the year: imports of goods decreased, while exports increased. Since imports are subtracted from the government’s measurement of domestic economic activity, they tend to lower GDP.

According to the Department of Commerce report, consumer spending, which remains the main driver of the US economy, increased in the third quarter. People spent more on hospital and nursing home services, prescription drugs, and “information processing equipment” such as computer hardware, likely as part of the artificial intelligence boom.

Consumer spending remained resilient for most of the year; however, recent surveys indicate that more people are pessimistic about their financial prospects.

A new report on consumer confidence released by the Conference Board on Tuesday revealed that consumer confidence has fallen for five consecutive months as Americans are worried about inflation, the political environment, and the future of the labor market.

The GDP report released on Tuesday also showed that disposable personal income remained flat this quarter as inflation continued to erode Americans’ salaries.

“We are coasting on past successes as consumers have experienced strong wage increases for several years in a row,” said Michael Zdinak, an economist at S&P Global Market Intelligence. “Today’s report shows that demand is strong and consumers are willing to spend money; of course, if only a Sword of Damocles—like artificial intelligence taking their jobs or mass layoffs being around the corner—wasn’t hanging over their heads,” he added.

On average, workers’ wages are rising faster than prices. But these wage increases have slowed in recent months as a weakening labor market reduces workers’ bargaining power for higher pay. Wealthier shoppers are supporting a large portion of spending in stores and restaurants in the US.

Inflation is cooling significantly, with consumer prices rising 2.7% in November compared to the previous year. Prices for some food items continued to fall, but this was not enough to offset rising major costs such as rent, electricity, and health insurance.

According to the latest poll by NPR/PBS News/Marist, only 36% of Americans approve of President Trump’s handling of the economy. This is the worst result in the six years Marist has asked this question.