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The U.S. economy grew at an annualized rate of 3.4% in the third quarter, beating Wall Street expectations, as booming AI spending continues to fuel growth.
The figure marks an acceleration from the 2.2 percent expansion rate recorded in the second quarter and is higher than the 3.2 percent forecast by a Bloomberg poll of analysts.
Real final sales to domestic private buyers – a closely watched measure that combines consumer spending and private fixed investment – rose 4.9 percent in the third quarter, up from 4.6 percent.
Government spending also increased, largely reflecting oil sales from the Strategic Petroleum Reserve. The increase in imports, which counts as a negative element in the calculation of GDP, canceled part of the gains.
“This appears to be a strong quarter, driven by domestic demand activities and dampening trade,” said Eric Winograd, senior fixed income economist at AllianceBernstein. “We talk about the growth boost that AI brings, but a lot of that is imported. »
US GDP growth this year has been supported by huge investments by US companies in AI data centers and high-tech equipment. Consumers also continued to spend despite inflationary pressures.
Thursday’s data was accompanied by higher inflation figures, with the personal consumption expenditures index, the Federal Reserve’s preferred gauge, rising to an annual rate of 3.6 percent in September, up from 3.4 percent previously.
But despite price pressures, data released Wednesday showed U.S. consumers continued to spend, with spending on health care, food and lodging increasing.
Federal Reserve Chairman Kevin Warsh said Wednesday, after the central bank kept rates steady, that “economic growth has strengthened,” praising “healthy” consumer spending and investment spending that he said represented a “historically high share of GDP.”
Jim Bianco, president of Bianco Research, said: “The most interesting number is inflation, which has been higher than expected… Back to my question from yesterday: why hasn’t the Fed raised rates yet?”
President Donald Trump has described the U.S. economy as “the most dynamic in the world,” growing consistently faster than other G7 countries.
Market reaction to the GDP report was muted, with a slight decline in the two-year Treasury yield and the US dollar index. Stock market futures rose.
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