GDP growth remains elevated in Q3

GDP reading: GDP growth dipped to 2.8% in seasonally adjusted annualized rate terms (SAAR) in the third quarter, from 3.0% in the second quarter. However, the reading was likely by far the strongest in the G7, marking a continuation of the U.S.’ outperformance relative to other major advanced economies—a constant since 2023. On an annual basis, economic growth edged down to 2.7% in Q3 compared to the previous period's 3.0%.

Drivers: Looking at expenditure components, private consumption improved to 3.7% SAAR in the third quarter (Q2: +2.8% SAAR). Government spending, meanwhile, improved to a 5.0% expansion in Q3 (Q2: +3.1% SAAR). Fixed investment growth fell to 1.3% in Q3 (Q2: +2.3% SAAR). On the external front, exports of goods and services growth improved to 8.9% in seasonally adjusted annualized terms in the third quarter (Q2: +1.0% SAAR). In addition, imports of goods and services growth picked up to 11.2% in Q3 (Q2: +7.6% SAAR).

GDP outlook: Our panelists expect the economy to settle into a slightly slower gear from Q4, though risks appear skewed to the upside in light of the economy’s robust growth so far this year.

Panelist insight: On the near-term outlook, TD Economics’ Thomas Feltmate said: “Economic growth is likely to round out the year on a softer note, as a further cooling in the labor market leads to some moderation in consumer spending. Equipment investment also looks poised for some giveback after two consecutive quarters of very healthy gains, while Q3's gain in federal defense spending is unlikely to repeated in Q4. We also can't forget that fourth quarter growth is likely to see some distortions stemming from hurricane's Helene and Milton.”

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects American GDP projections for the next ten years from a panel of 73 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable GDP forecast available for American GDP.

Download one of our sample reports to visualize what a Consensus Forecast is and see our American GDP projections.

Want to get access to the full dataset of American GDP forecasts? Send an email to info@focus-economics.com.