Commerce Data Shows U.S. GDP Accelerated in Summer

The American economy expanded at a faster clip this summer than it did in the spring.

The Department of Commerce reported Thursday that gross domestic product grew at an annual rate of 3.4% from July through September. This marked a clear acceleration from the 2.2% annual pace recorded in the previous quarter. The department identified two primary engines for this growth: substantial investment in artificial intelligence and increased spending by consumers.

Technology firms led the capital investment surge. Companies continued to build out data centers and allocate large sums of money toward developing new AI tools. On the consumer side, spending remained steady but uneven. Higher-income Americans, who possess greater buffers against high prices, drove much of the activity. Lower-income households, however, faced tighter constraints as wage growth lagged behind rising costs.

This macroeconomic data arrived just days before the midterm elections. Many voters report feeling pessimistic about their personal finances, citing high inflation and energy costs driven by the ongoing conflict with Iran. While national aggregates show growth, individual experiences vary sharply across income levels.

Siri Steven, a manager at a resale store in Decorah, Iowa, described her family's financial situation. The couple is delaying repairs on their home, which is more than 130 years old. "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." Her family lives paycheck to paycheck and has been unable to build savings.

National data reflects this tightening. The personal saving rate fell to 3.8% in September, down from 4.1% in August. Inflation remained sticky, with prices rising 3.6% from a year earlier. This rate exceeds the Federal Reserve's 2% target. The central bank held its benchmark interest rates steady on Wednesday, though the strong inflation figure adds pressure to hike rates at the next meeting in December.

Mark Zandi, chief economist at Moody's Analytics, characterized the current growth as fragile. He noted that businesses and consumers must adjust to administration policies, including tariffs and the war in 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."