US Economy Grows at Brisk 3.4% Pace in Third Quarter on Strong Consumer Spending and AI Investment

A 3.4% annualized expansion puts the U.S. economy on firmer footing than forecasters expected. But beneath the headline, household finances, trade and the financing of AI infrastructure reveal a less comfortable balance.

A 3.4% headline, backed by private demand

The economy grew at a 3.4% annualized rate from July through September, up from 2.2% in the previous quarter and above forecasters’ 3% expectation. The advance estimate, released by the Commerce Department on October 29, was the first of three scheduled GDP estimates. The figure is annualized: the economy’s actual quarter-to-quarter increase was 0.8%.

The more revealing measure may be real final sales to private domestic purchasers, which rose 4.9%. It strips out trade, inventory changes and government spending, isolating household consumption and private fixed investment. That acceleration from 4.6% in the second quarter supports a clear reading: underlying private demand was not merely being flattered by temporary accounting movements.