US economy beats forecasts to grow at 3.4% rate in third quarter

{"text":[[{"start":0,"text":"The US economy expanded at an annualised rate of 3.4 per cent in the third quarter, topping Wall Street expectations, as companies invested heavily in AI and American consumers continued to splash out despite high prices."}],[{"start":25.44,"text":"Thursday’s strong GDP figure from the Bureau of Economic Analysis marked an acceleration from the 2.2 per cent growth rate in the second quarter and was ahead of the 3.2 per cent forecast in a Bloomberg poll of analysts."}],[{"start":39.24,"text":"The increase was fuelled by corporate America’s huge spending on infrastructure associated with the AI boom and a continued splurge by consumers, even as the Iran war causes inflation to surge."}],[{"start":50.48,"text":"“The seemingly indefatigable US consumer and a nascent AI investment boom continue to drive the US economy, with growth running well above trend,” said James McCann, senior economist at Edward Jones."}],[{"start":63.04,"text":"AI spending led the gains, with private fixed investment jumping 9.4 per cent during the quarter, its biggest rise since the post-Covid rebound in 2020, as tech groups raced to build data centres and snap up high-tech equipment."}],[{"start":77.24,"text":"Consumer spending rose 3.8 per cent, the same pace as the previous period, even as a torrent of inflation washed across the economy and a boost from tax refunds faded."}],[{"start":87.16,"text":"Government spending increased, largely reflecting a wind-down of oil sales from the Strategic Petroleum Reserve. Oil sales are deducted from government expenditures, so a lower number is reflected as higher spending."}],[{"start":98.92,"text":"A drop-off in net exports acted as a drag on growth as companies ratcheted up imports of tech equipment. Imports are treated as a negative in GDP calculations."}],[{"start":108.6,"text":"“It looks like a strong quarter driven by domestic demand activities and a drag from trade,” said Eric Winograd, senior economist for fixed income at AllianceBernstein. “We talk about the boost to growth from AI, but a lot of that stuff is imported.”"}],[{"start":null,"text":"

"}],[{"start":122.86,"text":"The data comes days ahead of US midterm elections to determine control of Congress. Donald Trump has boasted the US economy is the “hottest in the world” as he looks to convince voters his policies are working for them despite rising prices."}],[{"start":136.32,"text":"Thursday’s report suggests the world’s biggest economy remains in robust health as spending continues to accelerate even as inflation bites. The Iran war has pushed up fuel costs that have fed through to other areas of the economy, while the AI construction boom has also pushed up costs."}],[{"start":153.64,"text":"Fresh inflation figures released on Thursday showed the Personal Consumption Expenditures index, the Federal Reserve’s preferred metric, rising to an annual rate of 3.6 per cent in September, up from 3.4 per cent previously."}],[{"start":167.88,"text":"Less affluent Americans in particular have been squeezed by higher prices. But Wednesday’s data showed that on the whole, American consumers continued to splash out in the third quarter, with spending on healthcare, food and accommodation rising."}],[{"start":181.7,"text":"“The economy remains remarkably resilient, but doesn’t resonate for too many — because individual lived experiences are not the same as the averages,” said Diane Swonk, chief economist at KPMG US. “The burn of inflation is real, cumulative and the level of prices is still too high for too many.”"}],[{"start":199.6,"text":"Fed chair Kevin Warsh highlighted the strength of the US economy on Wednesday after the central bank held rates steady. Policymakers said they needed more time to assess the data before voting for a further rate rise."}],[{"start":211.76,"text":"Warsh hailed “healthy” consumer spending and capital expenditures that he said were at a “historically high share of GDP” even as he acknowledged inflation remained well above the central bank’s 2 per cent target."}],[{"start":223.08,"text":"Jim Bianco, president at Bianco Research, said the inflation figure was “more interesting” than the GDP number, coming in “hotter than expected”. “I’ll revisit my question from yesterday: why didn’t the Fed hike rates again?” he said."}],[{"start":237.04,"text":"The market reaction immediately following the GDP report was muted, but moves picked up steam as the day wore on. The yield on the two-year Treasury was down 0.09 percentage points at 4.65 per cent and the US dollar index was 0.2 per cent lower. The S&P 500 closed 0.3 per cent lower and the Nasdaq 100 dropped 1.4 per cent, weighed down by several Big Tech companies."}],[{"start":266.52,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1793317777_6693.mp3"}