Key facts
- US third-quarter GDP grew at a 3.4% annualized rate.
- Consumer spending rose 3.8% in the third quarter.
- Business investment in equipment increased 20.9% in the third quarter.
- The PCE Price Index rose 3.6% in September.
- About 50% to 60% of items in the PCE Price Index posted annual price increases above 3% in September.
New US economic data indicates a robust expansion that may challenge Federal Reserve Chairman Kevin Warsh's assessment that the economy is not 'too hot' to handle without stoking inflation. The third-quarter gross domestic product grew at a 3.4% annualized rate, exceeding expectations, driven by strong consumer spending and significant business investment. Inflationary pressures, however, remain broad-based, with a substantial portion of the Personal Consumption Expenditures Price Index components showing annual price increases above 3%. Despite these figures, Warsh expressed reluctance to label the economy as 'too hot,' citing difficulties in estimating potential growth and the impact of productivity gains from artificial intelligence.