The US economy grew faster than expected in the third quarter as resilient consumer spending and AI-driven business investment more than offset the impact of higher oil prices stemming from the conflict in the Middle East.<\/p>\n
Gross domestic product increased at a 3.4% annualised rate last quarter, the Commerce Department’s Bureau of Economic Analysis said in its advance estimate of third-quarter GDP today.<\/p>\n
Economists polled by Reuters had forecast GDP advancing at a 3.2% pace. Estimates ranged from a 1% growth rate to a 4.2% pace.<\/p>\n
The strength in growth is in stark contrast to households’ downbeat assessment of the economy, reflected in President Donald Trump’s record-low approval ratings and a sharp deterioration in consumer sentiment.<\/p>\n
The report was published less than a week before Tuesday’s midterm elections, which will determine control of Congress.<\/p>\n
The economy is expanding at a pace that is well above what some Federal Reserve officials regard as the non-inflationary growth rate of around 2%. The US Fed last night left its benchmarkinterest rate in the 3.75%-4% range while acknowledging that inflation “remains elevated.”<\/p>\n
Economists expected the Fed to raise rates in December. Fed Chairman Kevin Warsh told reporters “economic activity is expanding at a strong pace,” noting that “while uncertainty remains, owing in part to geopolitical developments, domestic spending has been resilient.”<\/p>\n
Given the increasing dominance of AI-related spending, some economists said the strong GDP growth was probably not a true picture of the economy.<\/p>\n
Investors are increasingly focusing on the rising costs of long-term AI projects in which the payoff is uncertain. Tech firms have borrowed huge sums over the past year for AI spending, a potential downside risk to equipment spending.<\/p>\n
Economists did expect this pillar of support to weaken, though a pullback in spending was likely.<\/p>\n
Consumer spending, which accounts for more than two-thirds of the economy, increased at a 3.8% pace in the three months from July to September after growing at a 3.8% rate in the second quarter. Historically low layoffs and moderate hiring are helping to underpin spending, though wage gains have at times lagged inflation.<\/p>\n
But households also have been saving less and dipping into their nest eggs to fund spending. With average gasoline prices still above $4 a gallon as the US-Israeli war with Iran drags on, economists anticipated a slowdown in consumer spending.<\/p>\n","protected":false},"excerpt":{"rendered":"The US economy grew faster than expected in the third quarter as resilient consumer spending and AI-driven business…\n","protected":false},"author":2,"featured_media":669238,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[72,113,61,60],"class_list":["post-669237","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-ie","tag-ireland"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/669237","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=669237"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/669237\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/669238"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=669237"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=669237"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=669237"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}