U.S. economy grew at a 2.8% pace in the third quarter, less than expected

The U.S. economy posted another solid though slightly disappointing period of growth in the third quarter, propelled higher by strong consumer spending that has defied expectations for a slowdown.

Gross domestic product, a measure of all the goods and services produced during the three-month period from July through September, increased at a 2.8% annualized rate, according to a Commerce Department report Wednesday that is adjusted for inflation and seasonality.

Economists surveyed by Dow Jones had been looking for an increase of 3.1%. The economy accelerated at a 3% pace in the second quarter. Wednesday's reading is the first of three the department will issue.

The report confirms that the U.S. expansion has continued despite elevated interest rates and long-standing worries that the burst of fiscal and monetary stimulus that carried the economy through the Covid crisis wouldn't be enough to sustain growth.

However, resilient consumer spending, which accounts for about two-thirds of all activity, has helped keep the economy moving, as has a relentless wave of government spending that pushed the budget deficit to more than $1.8 trillion in fiscal 2024.

Personal consumption expenditures, the proxy for consumer activity, increased 3.7% for the quarter, the strongest performance since Q1 of 2023. Another major factor the department cited for growth was federal government spending, which exploded higher by 9.7%, pushed by a 14.9% surge in defense outlays.

However, an 11.2% jump in imports, which subtract from GDP, held back the growth number and offset an 8.9% gain in exports.

Markets showed little reaction to the data, as stock market futures pointed to a mixed opening. Treasury yields also were mixed. Earlier in the morning,