The U.S. economy grew at a 2.8% annual pace last quarter as consumers continued to open their wallets despite elevated interest rates. 

Forecasters expected the country’s gross domestic product — the total value of goods and services produced in the U.S. — to come in at 2.6% in the three-month period ended in September, according to a survey of economists by the data firm FactSet. The latest GDP figure is down slightly from the second quarter’s growth of 3%.

The American economy, the world’s biggest, has shown surprising resilience in the face of sharply higher borrowing rates as the Federal Reserve tightened monetary policy in a bid to tame inflation. Despite widespread predictions that the economy would succumb to a recession, however, it has kept growing, with hiring and consumer spending holding steady.

Wednesday’s GDP report marks one of the last major economic readings before the November 5 election, with the monthly jobs report due on 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 East Coast port strike could drag down those numbers.

“Despite earlier fears that the U.S. economy was headed for recession, growth continued to outperform other” developed markets, noted Paul Ashworth, chief North America economist at Capital Economics, in a Wednesday research note. “Overall, the U.S. economy appears to be doing just fine, particularly with the ADP payroll survey suggesting that 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. That could signal that U.S. households will continue spending, a key to economic growth. 

“The percent of consumers expecting a recession in the next 12 months fell to its lowest since the question was first posed in July 2022, with just under two-thirds of respondents believing that a recession is either somewhat or very likely in the next 12 months,” noted analysts at PNC Financial Services Group in a report.

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

“With consumer spending growth north of 3.5%, the U.S. consumer is not showing any hint of a slowdown,” Olu Sonola, head of U.S. economic research at Fitch Ratings, said in an email. “Far from it. With an economy this strong, it is difficult to imagine that labor market conditions will deteriorate sharply over the near term.”

The Associated Press contributed to this report.

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