U.S. Economy Grew 3.4% in Third Quarter as Inflation Stays Elevated

The U.S. economy expanded at a 3.4% annualized rate in the third quarter, beating the 3.1% consensus forecast and accelerating from 2.2% in the second quarter, according to the latest GDP report.

Inflation data was less comforting. The PCE price index rose 0.5% in September and 3.6% from a year earlier, up from 3.4% the month before. Core PCE, which excludes food and energy, rose 0.3% on the month and 3.1% year over year. Consumer spending rose 0.5%, slightly below the 0.6% forecast, and personal income gained 0.2% versus the 0.3% expected.

The Federal Reserve held its benchmark rate at 3.75%–4.00% on October 28. Stronger growth combined with sticky inflation keeps pressure on policymakers and on rate-sensitive stocks.