US economy grows at 3.4% pace in third quarter, beating forecasts days before midterms despite stubborn inflation
Donald Trump has seen AI investment emerge as a key driver behind the US economy's stronger-than-expected 3.4% third-quarter growth.A data graphic showing the US economy's third-quarter performance, as business investment jumped 12.7% — its strongest contribution to growth in the period.
The Commerce Department's advance estimate, released Thursday, showed the US economy expanded at a 3.4% annualised rate from July through September — the fastest growth in nearly three years and well above the 3% forecasters had projected. Consumer spending surged 3.8% while business investment jumped 12.7%, driven largely by an AI-spending boom that saw outlays on information processing equipment leap 37.4%. The figures land just days before midterm elections in which inflation and rising energy costs have hammered Republican poll ratings.
Inflation remains a cloud: the Fed's preferred PCE gauge rose 3.6% year-on-year in September, accelerating from 3.4% in August.
At its Wednesday meeting, the Fed left interest rates unchanged at 3.75%-4.00%, pausing after its September hike as officials await further data.
Housing investment fell 3.3%, its sixth decline in seven quarters, with high mortgage rates continuing to squeeze the property market.
