The U.S. economy expanded at a 4.4% annual pace in the third quarter, the fastest growth in two years, according to a Commerce Department report issued Thursday with a slight upgrade to the government’s first estimate.
Gross domestic product rose from July through September at a 4.4% annual pace, up from 3.8% in the April-June quarter. The department also revised its initial estimate for the third quarter to 4.4% from the previously estimated 4.3%.
Consumer spending, which accounts for 70% of U.S. GDP, grew at a 3.5% pace in the quarter. The report said spending on services rose 3.6%, compared with a 3.0% uptick on goods, including an increase of 1.6% on durable goods such as cars meant to last at least three years.
The government said a surge in exports and a drop in imports also contributed to the robust third-quarter growth. Business investment excluding homebuilding rose at a 3.2% clip, partly reflecting bets on artificial intelligence.
The report said the economy has remained resilient amid uncertainty around President Donald Trump’s economic policies, including double-digit taxes on imports from almost every country on Earth.
Even with the stronger output growth, many Americans are dissatisfied with the state of the economy and especially the high cost of living. The gap between how consumers describe their feelings and the spending numbers might reflect what the report called a “K-shaped economy,” in which wealthier Americans spend more while lower-income households struggle with stagnant pay and high prices.
The job market, meanwhile, looked weaker than the overall economic growth. Employers have added about 28,000 jobs a month since March, compared with the roughly 400,000 jobs a month employers were creating in the 2021-2023 hiring boom after COVID-19 lockdowns.
Despite the slower hiring, the report said the unemployment rate remains low at 4.4%, suggesting what it described as a “no-hire, no-fire” labor market. In that scenario, companies hesitate to add new employees while also holding on to workers they have.
Heather Long, chief economist at Navy Federal Credit Union, said the United States is experiencing a “jobless boom where strong growth is powered by AI investments and consumption by wealthier families, but there is almost no hiring,” and called it “an uneasy situation for many middle-class families.” She added: “One of the big questions for 2026 is whether the middle class will start to feel the uplift from the boom.”