The US economy expanded at an annualized quarterly rate of 3.4% in the third quarter, outpacing the 3.2% consensus. The rise was driven mainly by domestic demand—particularly consumer spending—and by certain investment categories.
Consumption and services
Personal consumption rose 3.8% on an annualized quarterly basis. Within consumption, services were the main contributor: services spending increased by 4.1%, underscoring continued strength in household outlays.
Investment: equipment, AI-related items and construction
Investment showed a mixed picture. Residential construction fell 3.3%, while nonresidential construction rose nearly 13%. Investment in structures and equipment was notable: equipment and machinery increased by 20% annualized. Items linked to artificial intelligence rose by nearly 10%, indicating that AI-related capital spending remains an important growth driver.
Trade and imports
Net trade weighed on the headline number: imports jumped nearly 20%, while exports fell by about 6%. The drop in exports reflects weaker external demand, highlighting an asymmetry between strong domestic demand and softer international markets.
Inflation metrics and household finances
For the third quarter the PCE (Personal Consumption Expenditures) price index rose 2.2%. The latest monthly figures showed headline PCE inflation at 3.6% and core PCE inflation at 3.1%, in line with expectations. Month‑on‑month, consumer spending rose 0.5% and personal income increased 0.2%.
What this implies for the outlook
Taken together, the data suggest a US economy that is resilient to external shocks: AI-related investment continues to support growth and concerns around AI have not yet curbed investment momentum. At the same time, weakening exports and a sharp rise in imports signal that a fragile external environment could constrain output if those trends persist.
Conclusion
Third-quarter figures point to a robust US expansion powered by household spending and technology-related investment. Future performance will depend on developments in global demand, oil prices and how monetary and fiscal conditions evolve.
