Key facts
- AI companies' data center buildout and technology spending were a big driver of third-quarter GDP growth, according to the Commerce Department report.
- Consumer spending drove growth, led in part by higher-income Americans, while lower-income households struggled more, the report said.
- Mark Zandi, chief economist at Moody's Analytics, said growth is fragile as businesses and consumers navigate Trump administration tariffs and the US war against Iran.
- Siri Steven, a manager at a resale store in Decorah, Iowa, said she and her husband are delaying repairs to their house and living paycheck to paycheck.
The US economy grew at an annual rate of 3.4% from July through September, the Commerce Department reported on October 29, faster than the 2.2% pace in the prior quarter. Consumer spending and investment by AI companies building data centers drove the expansion, according to the report.
A separate Commerce Department report showed prices rose 3.6% in September from a year earlier, above the Federal Reserve's 2% target. The personal saving rate fell to 3.8% in September from 4.1% in August. The Federal Reserve decided against raising rates on Wednesday, October 28, with added pressure to raise rates at its next meeting in December after the price reading, NPR reported.
Consumer spending has grown steadily but unevenly, with lower-income Americans struggling more than higher earners, and wage growth has fallen behind inflation, the report said. Siri Steven, a manager at a resale store in Decorah, Iowa, said she and her husband are putting off repairs to their more than 130-year-old house. "We barely go out to eat now," Steven said. "I really have to be mindful of our budget and make sure that we can pay all our bills and not overdraft."
Mark Zandi, chief economist at Moody's Analytics, said growth feels delicate as businesses and consumers navigate Trump administration policies including tariffs and the US war against Iran. "We're growing," Zandi said. "The economy is moving forward but it's a very, very fragile growth. It doesn't feel like we're kicking it in on all cylinders."