US Third-Quarter GDP Grows at 3.4% Annual Rate, Topping Forecasts on Business Investment and Consumer Spending

U.S. gross domestic product rose at a 3.4% annualized rate in the third quarter, the Commerce Department's Bureau of Economic Analysis said Thursday in a preliminary estimate, up from 2.2% in the second quarter and above the 3.2% consensus forecast cited by Bloomberg and Dow Jones. It was the fastest expansion in a year. Business investment, driven by an artificial intelligence spending boom, and resilient household demand powered the gain. Equipment spending's contribution to GDP was the highest since 2011, excluding the post-pandemic recovery, while consumer spending grew at a 3.8% annualized rate, above the 3.4% expected and strong for a second straight quarter. Inflation pressures persisted. The September PCE price index rose 0.5% month over month, the largest increase in six months, and 3.6% year over year. Core PCE, excluding food and energy, rose 0.3% on the month and 3.1% annually, matching consensus. The report follows the Federal Reserve's vote a day earlier to hold its benchmark rate at 3.75%-4%. Chair Kevin Warsh said officials face an "information-rich" period and are watching global developments closely. The data is the last major economic scorecard before next week's midterm elections.