U.S. Economy Likely Posted Strong Third-Quarter Growth, But Signs of Slowdown Emerge

The U.S. economy is estimated to have grown at a robust pace in the third quarter, supported by resilient consumer spending and steady business investment, according to expectations ahead of the Commerce Department’s delayed GDP release. Economists surveyed by Reuters project growth of about 3.3% on an annualized basis, down slightly from the 3.8% expansion in the second quarter. Lower imports also likely helped narrow the trade deficit, while a rush by consumers to purchase electric vehicles before the expiration of tax credits boosted spending.

Despite the strong headline growth, underlying data point to a widening economic divide. Economists say the figures will likely reinforce the picture of a “K-shaped” economy, where higher-income households continue to spend freely, buoyed by stock market gains, while middle- and lower-income families struggle with rising living costs. Surveys indicate consumer spending is increasingly driven by wealthier households, even as lower-income Americans cut back on discretionary purchases such as travel, clothing and dining out.

Looking ahead, momentum is expected to fade in the fourth quarter, weighed down by the recent government shutdown, elevated inflation and affordability pressures. The Congressional Budget Office estimates the shutdown could shave up to two percentage points off fourth-quarter GDP, with some losses permanent. While business investment remains supported by artificial intelligence-related spending, economists caution that household budgets are strained and housing activity remains weak, suggesting slower growth before a potential rebound next year.

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