US economy grows 3.4% as inflation accelerates ahead of midterms

The U.S. economy grew at an annualized rate of 3.4% in the third quarter, beating market expectations, while September inflation accelerated, The Korea Times reported Thursday. The figures presented a mixed economic picture for President Donald Trump ahead of the midterm elections.

Stronger output has not resolved the pressure of rising prices on household budgets, and inflation remains above the Federal Reserve's 2% target. The competing trends come as Democrats seek control of both houses of Congress.

Investment and spending by consumers and government lifted output, while falling exports offset some of those gains, according to the Bureau of Economic Analysis estimate cited by The Korea Times. Imports, which are deducted when calculating gross domestic product, increased more than in the previous quarter.

The advance GDP estimate remains subject to revision. The bureau is expected to issue two additional estimates in the coming weeks, the newspaper reported.

Heather Long, chief economist at Navy Federal Credit Union, said a surge in artificial intelligence investment was a major reason growth exceeded expectations, according to The Korea Times. She estimated that the AI boom contributed almost a full percentage point to growth.

The September personal consumption expenditures price index, the Fed's preferred inflation gauge, rose 3.6% from a year earlier. Energy goods and services prices increased 21.3%, and the newspaper linked inflation pressures partly to energy costs associated with the U.S.-Israel war on Iran and to Trump's tariffs.

The Fed left interest rates unchanged Wednesday as it sought additional data after raising rates in September, according to The Korea Times. Markets largely expected a 0.25-percentage-point increase in December.

The newspaper described an uneven economy in which wealthier households were prospering while working-class families struggled. Gregory Daco, chief economist at EY-Parthenon, said consumers were stretching their budgets to cover more expensive goods and services.

The next GDP estimates will offer a revised view of the expansion, but the latest figures already show the divide between stronger economic output and persistent pressure on household purchasing power.