By MATT OTT, Associated Press Business Writer

WASHINGTON (AP) — The U.S. economy economy expanded at a surprisingly strong 4.3% annual rate in the third quarter as consumer spending, exports and government spending all grew.

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U.S. gross domestic product from July through September — the economy’s total output of goods and services — rose from its 3.8% growth rate in the April-June quarter, the Commerce Department said Tuesday. Analysts surveyed by the data firm FactSet forecast growth of 3% in the period.

However, inflation remains higher than the Federal Reserve would like. The Fed’s favored inflation gauge — called the personal consumption expenditures index, or PCE — climbed to a 2.8% annual pace last quarter, up from 2.1% in the second quarter.

Excluding volatile food and energy prices, so-called core PCE inflation was 2.9%, up from 2.6% in the April-June quarter.

Consumer spending, which accounts for about 70% of U.S. economic activity, rose to a 3.5% annual pace last quarter, up from 2.5% in the April-June period.