The United States experienced robust economic expansion during the third quarter, though the Federal Reserve’s preferred <a The contributors to the increase in real GDP in the third quarter were increases in investment, consumer spending, and government spending that were partly offset by a decrease in exports," the BEA said in a statement.
The <a s retaliatory measures, with American consumers facing an average 42 percent increase at the pump for regular gasoline, based on AAA motor club data.
The president’s expansive tariff strategy has also disrupted international trade and contributed to inflationary pressures.
Strong GDP growth
The impressive GDP figures will likely serve as a political asset for Trump, who has frequently highlighted economic strength despite the high costs that have burdened households nationwide.
A significant portion of this growth has been fueled by a surge in Artificial Intelligence (AI) investment, with corporations pouring billions into developing new models and constructing the necessary data centers.
The BEA noted that the rise in GDP was propelled by increased investment and higher government spending, which were partially dampened by a decline in exports.
Imports, which act as a deduction in the GDP calculation, also saw a larger increase in the third quarter compared to the previous one.
Thursday’s GDP report was an initial estimate from the BEA; two subsequent revisions are scheduled for the coming weeks, which may alter the final figures.
For months, economists have cautioned that while U.S. GDP growth remains resilient despite war-related price pressures, the benefits have been unevenly distributed, with affluent households thriving while working-class families face significant hardship.
Fed implications
The Fed favors the PCE price index for tracking inflation because it encompasses a wider array of household expenses than the Consumer Price Index (CPI).
On Wednesday, the central bank opted to maintain steady <a s dedication to its long-term two-percent PCE inflation target, a goal that has remained elusive for over five years.
He described current inflation rates as “too high” but advised against hasty action, noting that the Fed had observed some tightening of financial conditions following the interest rate hike in September—the first such increase in three years.
Markets largely anticipate that the Fed will implement another quarter-point rate hike in December.
‘Failed agenda’
Trump’s political rivals criticized his economic stewardship following the release of the PCE figures, which revealed a 21.3 percent year-on-year jump in the cost of energy goods and services.
“Today’s data confirms families paid more in September for gasoline, housing, and health care,” said Democratic Senator Elizabeth Warren.
“Since Trump took office, families have paid $3,772 on average because of inflation. Trump’s failed agenda is driving up costs and eating into Americans’ paychecks.”
During a rally in South Carolina, Trump touted the “roaring” economy, renewed his criticism of Fed officials regarding monetary policy, and urged his supporters to vote Republican.
“If the Democrats win the midterms, they will burn it all down,” he said.
Heather Long, chief economist at Navy Federal Credit Union, remarked that the U.S. economy is “on steroids right now” but identified high inflation as its “Achilles heel.”
“Growth came in stronger than expected and it’s largely due to the massive AI business investment surge,” she said. “The AI boom is adding almost a full percentage point to growth.”
Gregory Daco, chief economist at EY-Parthenon, observed that while consumer spending remains elevated, “they are increasingly stretching their budgets to afford pricier goods and services.”
