The American economy continued to show signs of strength in the third quarter of the year, expanding at a healthy 2.8% annual pace. This growth was largely driven by strong consumer spending and a surge in exports. While this rate was slightly lower than the previous quarter, it still demonstrates the resilience of the U.S. economy, which has now experienced growth above 2% for eight of the last nine quarters.
Consumer spending, which accounts for a significant portion of economic activity, accelerated to a 3.5% annual pace, the fastest rate since the fourth quarter of 2023. Additionally, exports increased at a 7.5% rate, the highest in two years. However, growth in business investment slowed, particularly in housing and nonresidential buildings.
Despite the positive economic indicators, American voters expressed frustration with high prices and elected Donald Trump as the next President, along with Republican majorities in Congress. Trump has promised to overhaul the nation's economic policies, including implementing new import taxes on goods from China, Mexico, and Canada. Mainstream economists view such tariffs as potentially inflationary, as they could lead to higher costs for U.S. importers and consumers.
The Federal Reserve has been closely monitoring inflation, which has fallen from a high of 9.1% in June 2022 to 2.6%. The central bank has cut its benchmark interest rate in response to this progress, with expectations for further rate cuts in the future. Despite this, prices are still about 20% higher than they were in February 2021, before inflation began to rise.
Overall, the U.S. economy appears to be in a healthy state as President-elect Trump prepares to take office. With steady growth, low unemployment, and falling inflation, the outlook is positive. However, challenges remain, particularly in addressing high prices and potential trade policies that could impact economic stability.