US economy grows 3.4% in third quarter on strong consumer spending
The American economy expanded at a brisk 3.4% annualised pace in the third quarter, driven by robust consumer spending and investment in artificial intelligence, despite higher energy prices linked to the conflict with Iran.
The American economy grew at an annualised pace of 3.4% in the third quarter, a strong showing powered by robust consumer spending and heavy investment in artificial intelligence. The expansion came despite higher energy prices caused by the fighting involving Iran, underlining the resilience of the world's largest economy.
Consumer spending, which accounts for the bulk of economic activity in the United States, remained the main engine of growth over the period. Households continued to spend even as fuel and energy costs rose, a development that surprised some analysts who had expected the price shock to dent demand more sharply. The figures suggest that many American households were prepared to absorb higher costs rather than cut back on everyday purchases.
Business investment in AI-related technology also contributed meaningfully to the quarter's result. Companies have been directing large sums toward data centres, computing hardware and software tied to artificial intelligence, and that spending has become one of the more visible drivers of activity in recent months. Such investment supports demand across the technology supply chain and adds to broader economic momentum.
The energy shock linked to the conflict with Iran had been a source of concern for policymakers and businesses alike, since higher oil and gas prices feed into transport, manufacturing and food costs. The quarter's reading indicates that, so far, those pressures have not been enough to stall the expansion. The strength of the figure may also complicate the picture for the Federal Reserve, which has been weighing how much momentum it considers sustainable while inflation remains a live issue.
The third-quarter estimate is an early reading and is typically revised as more complete data becomes available, so the final figure may differ from the initial 3.4% pace. Even so, a rate of that level is well above what many economists regard as consistent with steady growth over the long run, which raises questions about how durable the current momentum will be.
Taken together, the data describes an economy that has absorbed a significant external shock while continuing to expand. Strong household demand and AI-linked investment have carried the quarter, while the energy-price pressure linked to the fighting with Iran has so far been a drag that the economy has managed to withstand rather than a force that has halted growth.
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