Robust consumer spending, AI-related investment power US economy in third quarter
SPY•US GDP grew at a 3.4% annualized rate in the third quarter, above economists’ 3.2% forecast, as consumer spending and business investment strengthened. September PCE inflation rose 3.6% year over year, while inflation-adjusted consumer spending was unchanged for the month.
1. Growth beats expectations
US GDP grew at a 3.4% annualized rate in the third quarter, its fastest pace in a year and above economists’ 3.2% forecast. Consumer spending rose at a 3.8% rate, while business spending on equipment surged 20.9% and intellectual property investment increased 8.4%.
2. Trade and government spending
Imports rose at a 19.7% rate and subtracted 2.64 percentage points from GDP growth, while inventory rebuilding contributed 1.61 percentage points. Government spending increased at a 5.3% rate, but residential investment contracted as higher mortgage rates weighed on housing.
3. Inflation picks up
The PCE price index rose 0.5% in September and 3.6% year over year; core PCE inflation was up 3.1% year over year. Inflation-adjusted consumer spending was unchanged in September, and economists anticipated slower growth by year end.
