Commerce data shows third quarter GDP growth at 3.4 percent

The U.S. economy expanded at a 3.4 percent annual rate during the July through September period, the Commerce Department reported on Thursday. This marked an acceleration from the 2.2 percent annual growth recorded in the preceding quarter. The data arrives just days before the midterm elections, offering a snapshot of economic performance during a period of heightened political scrutiny.

Two primary factors fueled the third quarter expansion. Artificial intelligence companies continued to invest heavily in building data centers and developing new technology. Consumer spending also contributed significantly to the growth, driven largely by higher-income households that retain more purchasing power despite persistent inflation.

Despite the strong aggregate numbers, the benefits of growth have not been evenly distributed. Lower-income Americans report greater financial strain as wages lag behind rising costs. The personal saving rate fell to 3.8 percent in September, down from 4.1 percent in August, indicating that households are holding back less of their income.

Price pressures remain a central concern for policymakers. Inflation rose 3.6 percent in September compared to the same month last year. This rate exceeds the Federal Reserve's 2 percent target. The central bank held its benchmark interest rates steady on Wednesday, though the latest price data adds pressure for a potential increase at its next scheduled meeting in December.

Mark Zandi, chief economist at Moody's Analytics, described the current economic condition as fragile. He noted that businesses and consumers must adjust to administration policies, including tariffs and the conflict with Iran, which affects energy costs. Zandi stated, 'We're growing. 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.'

For many working families, the gap between macroeconomic data and daily reality remains visible. Siri Steven, a manager at a resale store in Decorah, Iowa, said her household is postponing home repairs on a property older than 130 years. She reported that the family has moved to a paycheck-to-paycheck existence to avoid overdrafts and manage essential bills.