U.S. economy posts 3.4% growth in third quarter

Gross domestic product expanded at an annual rate of 3.4% from July through September, according to a report from the Commerce Department released on Thursday. This pace represents a notable increase from the 2.2% annual growth recorded in the previous quarter. The data indicates that the U.S. economy performed better in the summer months than it did in the spring.

Investments in artificial intelligence served as a primary engine for this acceleration. Companies in the sector continued to construct data centers and allocate substantial capital toward technology development. Consumer spending also contributed significantly to the GDP figures, with the growth led largely by higher-income Americans. These households possess greater financial resilience against persistent inflationary pressures compared to lower earners.

The positive economic indicators arrived shortly before the midterm elections. While the aggregate numbers show strength, many Americans report feeling pessimistic about their personal financial situations. Inflation has increased the cost of daily necessities, and the ongoing conflict with Iran has pushed up energy prices, including gasoline. Wage growth has lagged behind price increases, squeezing the budgets of many households.

Siri Steven, a manager at a resale store in Decorah, Iowa, cited budget constraints as a reason her family is delaying repairs on their 130-year-old home. She noted that dining out has become rare and requires careful financial planning to avoid overdrafts. Her family is currently living from paycheck to paycheck without building savings. The personal saving rate in the U.S. fell to 3.8% in September, down from 4.1% in August.

Prices rose 3.6% in September compared to the same month in the prior year. This rate exceeds the 2% target set by the Federal Reserve. The central bank is closely monitoring this inflation measure as it determines its policy on benchmark interest rates. The Fed decided not to raise rates on Wednesday, though the strong price data adds pressure to consider a hike at its next meeting in December.

Mark Zandi, chief economist at Moody's Analytics, described the current growth as fragile despite the solid GDP figures. He attributed this delicacy to businesses and consumers adjusting to administration policies, including tariffs and the war with Iran. Zandi stated that the economy is moving forward but lacks full momentum, comparing the situation to a vehicle not running on all cylinders.