U.S. Economy Grew at 2.8% Rate in Third Quarter

Consumers are spending. Inflation is cooling. And the U.S. economy looks as strong as ever.

Gross domestic product, adjusted for inflation, expanded at a 2.8 percent annual rate in the third quarter, the Commerce Department said on Wednesday. That came close to the 3 percent growth rate in the second quarter and was the latest indication that the surprisingly resilient recovery from the pandemic recession remained on solid footing.

“The economy right now is firing on nearly all cylinders,” said Joe Brusuelas, chief economist at the accounting and consulting firm RSM.

The report was the first of three crucial indicators on the nation’s economy scheduled for release this week, just days before the presidential election and the next policymaking meeting of the Federal Reserve.

The strength in the third quarter was again driven by robust consumer spending, which grew at a 3.7 percent rate, adjusted for inflation. Rising wages and low unemployment meant that Americans continued to earn more, while inflation continued to ease: Consumer prices rose at a 1.5 percent annual rate in the third quarter and were up 2.3 percent from a year earlier.

As recently as a few weeks ago, many economists were concerned that spending was about to slow as the job market weakened and household savings dwindled. But revised data released last month showed that incomes and savings were stronger than initially reported, and recent data on the job market has been strong. That suggests that spending could continue to grow — especially because data released by the Conference Board this week showed that consumers were at last feeling more confident in the economy.

“Most consumers continue to be working,” said Dana Peterson, chief economist for the Conference Board. “If you’re a consumer and you’re working, then you’re going to spend.”