US economy grows at brisk 3.4% pace in third quarter on strong consumer spending and AI investment

The U.S. economy grew at a healthy 3.4% annual pace from July through September, accelerating from the second quarter on strong consumer spending and investment in artificial intelligence.

The expansion in third-quarter gross domestic product – the nation’s output of goods and services – was faster than the 2.2% growth registered from April through June, the Commerce Department said Thursday. Consumer spending rose at a brisk 3.8% clip in the third quarter, and business investment was up sharply, reflecting the AI boom.

The American economy – by far, the world’s biggest – has proven resilient in the face of higher energy prices caused by the fighting with Iran.

Economists had expected GDP to grow 3% in the third quarter, according to a survey of forecasters by the data firm FactSet.

U.S. growth has been lifted by an AI investment boom. Business investment, excluding housing, was up 12.7% in the third quarter. Investment in information processing equipment surged 37.4%, in software 9.6% and in research and development 7.5%.

However, housing investment, hurt by high mortgage rates, dropped 3.3% and has now fallen six of the last seven quarters.

Thursday’s report was the first of three Commerce Department estimates of third-quarter GDP growth.