The US economy grew 2.8% last quarter, driven by consumer spending

The U.S. economy grew 2.8% annually last quarter as consumers continued to open their wallets despite high interest rates.

Forecasters expected the country's gross domestic product – the total value of goods and services produced in the United States – to rise 2.6% in the three months ended in September, according to a survey of economists by data company FactSet. The latest GDP figure is down slightly from 3% growth in the second quarter.

The U.S. economy, the world's largest, has shown surprising resilience in the face of sharply rising borrowing rates as the Federal Reserve has tightened monetary policy in an effort to control inflation. Despite widespread predictions that the economy would succumb to a recession, it continued to grow, with hiring and consumer spending remaining stable.

Wednesday's GDP report is one of the last major economic numbers before the Nov. 5 election, with the monthly jobs report due Friday. Employers are expected to have hired 120,000 workers in October, a slower pace than September's 254,000 new jobs, according to FactSet. However, recent hurricanes and the strike at East Coast ports could lower these numbers.

“Despite earlier fears that the U.S. economy was heading into a recession, growth continued to outperform other” developed markets, noted Paul Ashworth, chief North America economist at Capital Economics, in a note research Wednesday. “Overall, the U.S. economy appears to be doing very well, especially with the ADP payroll survey suggesting private employment increased by 233,000 this month.”

Consumer confidence soared in October, reaching its highest level since January 2024, according to the Conference Board. This could indicate that American households will continue to spend, which is essential for economic growth.

“The percentage of consumers expecting a recession in the next 12 months has fallen to its lowest level since the question was first asked in July 2022, with just under two-thirds of respondents estimating that a recession is somewhat or very likely over the next 12 months,” PNC Financial Services Group analysts noted in a report.

Domestic demand was strong during the quarter, driven by consumer spending and equipment investment, economists said.

“With consumer spending growth above 3.5%, the U.S. consumer shows no signs of slowing down,” Olu Sonola, head of U.S. economic research at Fitch Ratings, said in an email. “Far from it. With such a strong economy, it is difficult to imagine that labor market conditions will deteriorate significantly in the short term.”

The Associated Press contributed to this report.

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Aimee Picchi

Aimee Picchi is an associate editor at CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and wrote for national media outlets including USA Today and Consumer Reports.

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