U.S. economy grew at a 3.4% pace in the third quarter as September inflation picked up

WASHINGTON (Oct. 29) — The U.S. economy grew at a 3.4% annual rate from July through September, speeding up from 2.2% in the second quarter, according to the advance estimate released Thursday by the Bureau of Economic Analysis. It is the last major reading on the economy before next week's midterm elections.

Investment, consumer spending and government spending drove the gain, partly offset by a drop in exports, the bureau said. Gross private domestic investment rose 19.4%, led by a 20.9% jump in equipment spending, and consumer spending grew 3.8%, CNBC reported. The pace beat economists' estimate of 3.1%, according to CNBC, and the Associated Press pointed to strong spending and investment in artificial intelligence.

Inflation measured across the full quarter cooled. The personal consumption expenditures price index rose at a 2.1% rate in the third quarter, down from 5.0% in the second, and 2.5% excluding food and energy, the bureau said.

The monthly numbers told a different story. In a separate report, the bureau said the PCE price index rose 0.5% in September and 3.6% from a year earlier, while core prices rose 3.1% from a year earlier, still well above the Federal Reserve's 2% target. CNBC said the monthly increase was the largest since March and was driven largely by energy, with gasoline and other energy goods up 9.2% for the month.

Personal income rose 0.2% in September and consumer spending rose 0.5%, slightly below forecasts, according to the bureau and CNBC. The personal saving rate was 3.8%.

The reports came a day after the Fed held interest rates steady.