US GDP Grew 3.4% in Q3, Beating Forecasts as Inflation Rose
Third-quarter U.S. economic growth topped expectations at 3.4%, while September inflation accelerated beyond projections.
The U.S. economy expanded at a faster-than-expected pace in the third quarter, with gross domestic product growing at an annualized rate of 3.4%, surpassing Wall Street forecasts and signaling continued resilience in economic activity.
September inflation also accelerated during the period, adding complexity to the broader economic picture. The personal consumption expenditures price index — the Federal Reserve's preferred inflation gauge — was projected to rise 0.5% for the month, translating to an annual rate of 3.7%, according to the Dow Jones consensus.
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The stronger GDP reading suggests consumer and business spending held up through the third quarter despite elevated borrowing costs stemming from the Federal Reserve's aggressive rate-hiking campaign. An uptick in inflation, however, could complicate the central bank's calculus as policymakers weigh when to pause or reverse course on interest rates.
The PCE inflation figure remains above the Fed's 2% long-term target, reinforcing the argument among some officials that monetary policy may need to stay restrictive for longer. Markets and analysts will closely scrutinize upcoming data releases for signs of whether the economy can sustain this growth trajectory without reigniting broader price pressures.
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