The economy looked great this summer. Americans don't feel it this winter

The U.S. economy made an unexpectedly strong showing in the third quarter of this year — July through September — with growth clocking in far above forecasts.

If the numbers feel out of sync with many Americans’ day-to-day reality, that disconnect is largely a matter of timing.

Here's what to know about the new data.

A delayed report points to earlier strength, and shows inflation building alongside growth

The record-long government shutdown this fall delayed the Commerce Department’s release schedule, meaning the GDP report released Tuesday captures the economy as it looked over the summer — before hiring slowed further, consumer sentiment sagged, and financial stress became more visible. The lag helps to explain why the data feels almost out of step with how many households and businesses might describe conditions today.

What’s more, one complicating detail sits just beneath the headline growth figure, suggesting that inflation pressures were also building over the quarter. The Fed’s preferred PCE inflation gauge also accelerated meaningfully compared with the prior quarter, even as growth picked up. Corporate profits rebounded, suggesting companies were still able to protect margins. But the mix of faster growth, higher prices, and more cautious investment all point to why the report feels less reassuring than it looks. It captures an economy that was running hot — if unevenly so — rather than one showing smoother, more broad-based expansion.

Since September, momentum has slowed in several highly visible ways. Vehicle sales have slipped on the back of rising prices, job growth has stalled out or turned negative, and more and more companies have pointed to financially strained consumers in earnings calls. So while it’s true that the economy didn’t suddenly weaken overnight, the strength reflected in the third-quarter numbers nevertheless belongs to an earlier moment.

Details of the data release

According to the Commerce Department data, GDP grew at a 4.3% annualized pace over the summer, making for the fastest expansion in roughly two years. That growth was driven primarily by consumers, whose spending increased meaningfully versus the second quarter. Exports and government outlays also made gains. Business investment, for its part, came in weaker—an early signal that confidence may have been fraying even as headline growth still looked strong.

Who’s doing the spending?

The report suggests that higher-income households — buoyed by the bull market in stocks and flush with real-estate equity — continue to shop, eat, travel, pick up prescriptions, and consume more generally. Confident on the back of their rising net worths, wealthier Americans are able to shrug off inflation and stubbornly high borrowing costs.

Middle- and lower-income households, meanwhile, are feeling the cumulative pressure of inflation, tariffs, and those same elevated interest rates, reinforcing an increasingly K-shaped economic picture.

That split helps explain why growth can look healthy in aggregate even as anxiety remains widespread. Strong spending at the top masks tightening budgets elsewhere, particularly among households without meaningful exposure to rising asset values. Airline-industry commentary and even grocery data all point to the same patter: premium demand holding up among the top-income tiers and value-seeking intensifying among lower-income tiers.

A high-stakes moment for Washington

For policymakers, the delayed snapshot complicates an already high-stakes and high-pressure balancing act. In recent months, the Federal Reserve has cut interest rates three times amid signs of labor market weakness, yet inflation remains stubbornly above target. Strong GDP numbers may appear a reason for caution, while at the same time, weaker hiring and rising delinquencies would appear to strengthen the case for relief.

Looking to the all-important fourth quarter and beyond, economists expect the government shutdown and lingering inflation pressures to weigh on growth.