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Consumer spending and AI-related business investment helped offset higher oil prices, while the Federal Reserve kept rates steady and signaled inflation remains elevated.
- On Thursday, the Bureau of Economic Analysis reported the U.S. economy grew at a 3.4% annualized rate in the third quarter of 2026, accelerating from the 2.2% growth recorded in the second quarter.
- Resilient consumer spending and a surge in artificial intelligence investments fueled the expansion, alongside government outlays, though rising imports acted as a drag on the headline figure.
- Separately, the Commerce Department reported the personal consumption expenditures price index rose 0.5% in September, pushing annual inflation to 3.6%, further from the Federal Reserve's 2% target.
- Maintaining its benchmark interest rate at 3.75% to 4% on Wednesday, the Federal Reserve acknowledged inflation "remains elevated," fueling analyst expectations of a potential December rate hike.
- High energy prices and geopolitical tensions make growth feel delicate, according to economists, and many Americans continue to express concern regarding the economy's long-term fiscal health.
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