The US economy grew last quarter at its fastest rate in nearly two years thanks to a surge in consumer spending.

Gross domestic product increased 4.9 percent annually in July through September, according to preliminary figures released by the Commerce Department on Thursday.

That was a jump up from a 2.1 percent rate in the second quarter and the largest growth since the fourth quarter of 2021. 

Consumer spending was up 4 percent, up from just 0.8 percent last quarter. Americans have so far defied analysts’ expectations of a recession by maintaining strong spending.

This summer they spent record-breaking amounts on blockbuster movies and concert tours, including Taylor Swift‘s Eras Tour and the Barbie movie, starring Margot Robbie

Consumer spending was up 4 percent, up from just 0.8 percent last quarter

Consumer spending was up 4 percent, up from just 0.8 percent last quarter

Gross domestic product grew at a 4.9 percent annual rate in the third quarter, Commerce Department figures revealed on Thursday

Gross domestic product grew at a 4.9 percent annual rate in the third quarter, Commerce Department figures revealed on Thursday

Thursday’s data comes two weeks before the Federal Reserve‘s next policy meeting, in which it will decide whether to adjust benchmark interest rates.

High consumer spending has resulted in inflation which has proven hard for officials to contain, despite relentless interest rate hikes designed to increase the cost of borrowing.

The Fed is now expected to maintain interest rates at their 22-year high of between 5.25 and 5.5 percent.  

‘The increase in real GDP reflected increases in consumer spending, private inventory investment, exports, state and local government spending, federal government spending, and residential fixed investment that were partly offset by a decrease in nonresidential fixed investment,’ said the Commerce Department.

Most US stocks opened lower on Thursday. The Nasdaq index dropped around 0.4 percent when markets opened, while the S&P 500 was down 0.2 percent.

The third quarter spending growth was preceded earlier this month by big jobs growth in September – a general indication of economic strength. The US economy added 336,000 jobs last month, nearly twice economists’ expectations of 170,000.

Gross domestic product increased 4.9 percent annually in July through September

Gross domestic product increased 4.9 percent annually in July through September

Consumers splurged this summer on record-breaking blockbuster movies and concert tours, including Taylor Swift's Eras tour and Margot Robbie's Barbie

Consumers splurged this summer on record-breaking blockbuster movies and concert tours, including Taylor Swift’s Eras tour and Margot Robbie’s Barbie

On Thursday, fresh data from the Labor Department indicated that jobless claims were up but still low in the grand scheme, having risen by 10,000 to 210,000.

But while spending appears to be strong, other signs suggest the spree may soon come to an end.

Mastercard stocks slipped on Thursday after its third quarter earnings call where the company signaled that spending had been slowing down so far in October.

The company forecast a weaker-than-expected growth in net revenue for the fourth quarter, signaling a potential moderation in spending volumes as an uncertain economic environment prompts caution among consumers. 

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