U.S. output grew at a 3.4% annual rate in the third quarter, the Bureau of Economic Analysis (BEA) said Thursday, while separate data showed September inflation at 3.6%, above the Federal Reserve’s 2% goal.
The BEA’s advance estimate put real gross domestic product growth at a seasonally adjusted annual rate of 3.4% in July through September, compared with 2.2% in the previous quarter. Investment, consumer spending and government spending added to growth, while lower exports and higher imports weighed on GDP.
Private inventories and equipment spending accounted for most of the investment growth. Within equipment, information processing equipment, mainly computers and peripherals, provided the largest contribution, BEA said. Real final sales to private domestic purchasers — consumer spending plus gross private fixed investment — rose at a 4.9% annual rate, following 4.6% in the second quarter.
The Personal Consumption Expenditures (PCE) price index rose 0.5% from August and 3.6% from a year earlier in September, up from 3.4% on an annual basis in August. Excluding food and energy, prices increased 0.3% for the month and 3.1% over the year. Current-dollar personal consumption expenditures rose 0.5%, while real PCE was unchanged.
In the GDP report, the PCE price index rose at a 2.1% annualized pace in the third quarter, down from 5.0% in the second. That quarterly measure covers a different period from September’s 3.6% year-over-year reading.
The Federal Open Market Committee held its federal funds target range at 3.75% to 4% on Wednesday in a 10-2 vote. Federal Reserve Governor Lisa D. Cook and Cleveland Fed President Beth M. Hammack dissented in favor of a quarter-point increase. The committee said inflation remained elevated and it needed more information to determine its policy stance.
The data arrive ahead of the U.S. midterm elections. CNA reported that voters considered the economy a key issue and that Democrats were seeking control of both chambers of Congress. CNA also cited unnamed economists who said wealthier households were prospering while working-class families struggled.
BEA scheduled its second estimate of third-quarter GDP and its October Personal Income and Outlays report for Nov. 25 at 8:30 a.m. EST.
