US Economy Surges 4.3% in Q3, Highest Growth in Two Years; Inflation Accelerates

• US economic growth hit 4.3% annualized in Q3, exceeding expectations and marking the highest rate in two years, driven by consumer and government spending, and exports.
• The Commerce Department report also revealed an acceleration in inflation, with the domestic purchases price index rising to 3.4% from 2.0% in Q2.
• Despite strong GDP, the Federal Reserve has focused on a weakening labor market, cutting interest rates, though strong growth might influence future policy decisions.
• Economists note the "resiliency of US consumers" but also a "K-shaped" recovery where consumption is driven by the wealthy, with job creation remaining "soft."
• Moderating tariff worries and massive AI infrastructure investments by tech giants like OpenAI and Google contributed to the improved macroeconomic outlook.

Why It Matters: US economy shows robust Q3 growth and accelerating inflation, challenging the Federal Reserve's policy path.