US GDP Growth of 3.4% and Rising PCE Inflation Test Fed Chair Warsh's "Not-Too-Hot" Stance

Federal Reserve Chairman Kevin Warsh's view that the US economy is not "too hot" is being tested by fresh data showing faster-than-expected growth and broadening price pressures, days after the Fed held interest rates steady. Third-quarter gross domestic product grew at a 3.4% annualized rate, the Commerce Department said Thursday, with consumer spending up 3.8% and business equipment investment up 20.9% — far above the 2% to 2.5% long-run growth range most policymakers project. The PCE Price Index rose 3.6% in September, up from 3.4% and well above its recent 2.3% low in March 2025. The Fed's 10-2 vote on Wednesday drew dissents from Governor Lisa Cook and Cleveland Fed President Beth Hammack, who favored raising rates now. Markets price roughly 80% odds of a quarter-point hike at the December 8-9 meeting. KPMG chief economist Diane Swonk said the Fed is "looking behind the curve," while BNY Investments' Vincent Reinhart expects two more hikes.