US Economy Accelerates to 3.4% Growth, Defying Recession Fears as Consumer Spending Surges

What’s happening

Third-quarter US GDP growth came in at 3.4%, exceeding economist expectations of 3.1% and marking a sharp acceleration from prior quarters. The surge was powered by resilient consumer spending and a surge in business investment, particularly in AI infrastructure and technology.

Market impact

The stronger-than-expected print contradicts household sentiment surveys showing consumer pessimism, suggesting consumers are spending despite feeling worse off. This dynamic supports equities but raises questions about consumption sustainability if wage growth fails to keep pace with inflation.

Broader implications

The growth acceleration reflects a bifurcated economy where AI-driven business investment and high-income consumer spending offset weakness in lower-income households. The result is a soft-landing scenario that keeps recession risk low but raises inequality concerns as productivity gains concentrate among capital owners.