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The U.S. economy grew at an annualized rate of 3.4% in the third quarter, surpassing expectations, according to a report from the Commerce Department. This growth, which covers the period from July to September, outpaced the 2.2% growth seen in the previous quarter and the 2.5% rate from the first quarter of the year.
Consumer spending and investments in artificial intelligence were key drivers of this economic expansion, as reported by Reuters. However, inflation remains a concern, with the Fed's preferred inflation gauge showing a year-over-year increase of 3.6% in September. Core inflation, which excludes energy and food costs, was at 3.1%.
The personal savings rate fell to 3.8%, the lowest in about four years, indicating that Americans are dipping into savings to maintain spending levels. ABC News noted that the rise in bond yields has increased rates for loans, adding to financial pressures on consumers.
Despite these challenges, the economy has shown resilience, with hiring continuing to grow and unemployment remaining low. Fed Chair Kevin Warsh expressed optimism about the economy's performance but acknowledged the ongoing challenge of elevated inflation. The Fed recently left interest rates unchanged, but there is pressure to raise rates again in December.
President Donald Trump commented on the economic growth on Truth Social, stating, "Our Economy is ROARING but, if the Dumocrats win the Midterms, they will burn it all down."