Third-Quarter U.S. Growth Hits 3.4% as AI Spending Drives Investment Surge

The U.S. economy expanded at a 3.4% annual rate from July through September, a figure that exceeded the 2.2% growth recorded in the prior quarter, the Commerce Department reported on Thursday. This acceleration marks the fastest pace of output for goods and services in the current year.

Household consumption drove much of this momentum. Consumer spending increased at a 3.8% clip during the third quarter. Separately, business investment excluding housing rose 12.7%, a sharp jump attributed largely to the ongoing expansion in artificial intelligence infrastructure.

Specific sectors within the technology sector saw substantial capital allocation. Investment in information processing equipment surged 37.4% while software spending climbed 9.6% and research and development expenditures grew 7.5%. These figures indicate that corporate capital is flowing heavily toward digital capabilities.

Forecasters anticipated a slightly lower performance than the final data showed. A survey of economists conducted by the data firm FactSet predicted 3% growth for the period. The actual result surpassed these projections, suggesting stronger underlying demand than previously modeled.

Housing remained a weak spot in the broader economic picture. Investment in the housing sector declined 3.3% due to persistent high mortgage rates. This drop represents the sixth consecutive quarter of decline out of the last seven, indicating continued pressure on the residential market.

The report released Thursday serves as the initial estimate for the third quarter. The Commerce Department will provide two additional revisions to this data in the coming weeks. Economists noted that the U.S. economy has maintained resilience despite higher energy prices linked to conflict with Iran.