WASHINGTON, Oct 26 Reuters The U.S. economy grew at its fastest pace in nearly two years in the third quarter as higher wages from a tight labor market helped to power consumer spending, again defying dire warnings of a recession that have lingered since 2022.

Gross domestic product increased at a 4.9 annualized rate last quarter, the fastest since the fourth quarter of 2021, the Commerce Department39;s Bureau of Economic Analysis said in its advance estimate of thirdquarter GDP growth. Economists polled by Reuters had forecast GDP rising at a 4.3 rate.

Estimates ranged from as low as a 2.5 rate to as high as a 6.0 pace, a wide margin reflecting that some of the input data, including September durable goods orders, goods trade deficit, wholesale and retail inventory numbers were published at the same time as the GDP report.

The economy grew at a 2.1 pace in the AprilJune quarter and is expanding at a pace well above what Fed officials regard as the noninflationary growth rate of around 1.8.

While the robust growth pace notched last quarter is unlikely sustainable, it was testament to the economy39;s resilience despite aggressive interest rate hikes from the Federal Reserve. Growth could slow in the fourth quarter because of the United Auto Workers strikes and the resumption of student loan repayments by millions of Americans.

Most economists have revised their forecasts and now believe that the Fed can engineer a softlanding for the economy, pointing to strength in…