U.S. Economy Shows Unexpected Strength in Third Quarter Despite High Inflation

The U.S. economy expanded at a robust 4.9% rate in Q3, exceeding expectations and showing resilience despite high inflation and interest rates.

Consumer spending drove the growth, with outlays on cars, dining out, vacations, and entertainment. Higher wages and savings allowed spending despite inflation.

Growth may slow in Q4 as the effects of rate hikes kick in. Inventories won't boost growth like Q3.

The Fed acknowledges the economy is stronger than expected but further rate hikes are likely if robust growth continues.

Inflation has eased to 3.7% from 9.1%, allowing the Fed to pursue a "soft landing" of slowing growth without recession.