US Q3 GDP Exceeds Expectations at 3.4% Amid Accelerating September Inflation
| Pair | Now | Since publish |
|---|---|---|
| EURUSD | — | — |
- US Q3 GDP grew 3.4% annualized, beating 3.2% expectations, fastest pace in a year
- September PCE inflation rose 0.5% monthly, annual rate hit 3.6%, above Fed target
- Net trade fully offset business investment gains; ING expects slower Q4 growth
- ING sees Fed rate hike in December as inflation stays hot
The U.S. economy expanded at an annualized rate of 3.4% in the third quarter, surpassing economists’ expectations of 3.2%. This growth was primarily fueled by resilient consumer spending and business investment, including AI-driven capital, despite trade acting as a drag. Concurrently, September’s personal consumption expenditures (PCE) price index increased 0.5% monthly, pushing the annual inflation rate to 3.6%, which remains above the Federal Reserve’s target. Core PCE, excluding volatile food and energy components, rose 0.3% monthly and 3.1% annually, aligning with consensus forecasts. The prior quarter’s GDP was also revised upwards to 2.2% from an initial 1.5%.
New details on the 3.4% annualized Q3 US GDP print: Bloomberg reports it was the fastest pace in a year, driven by strong business investment and a resilient consumer. ING notes consumer spending was strong and investment surged, led by tech-related activity. Because many of those inputs are imported, net trade fully offset the capex contribution to growth. ING says the print was only fractionally above market expectations and that cooler momentum points to slower Q4 GDP growth. ING also says inflation remains hot and expects the Fed to raise rates in December.