GDP GROWTH:
The U.S. economy grew at the rate of 3.4% in the third quarter, faster than expected, as business investment in artificial intelligence surged amid healthy consumer spending despite high fuel prices.
Compared to the second quarter, the Commerce Department said the acceleration in the third quarter’s gross domestic product primarily reflected an increase in investment and an upturn in government spending that were partly offset by a downturn in exports, which subtract from the GDP.
Sales to private domestic purchasers – the sum of consumer spending and gross private fixed investment – increased 4.9% in Q3 compared with a 4.6% jump in the second quarter.
The government also reported that inflation ticked up 0.5% in September to 3.6%, the largest monthly gain since March. Inflation was 1.4% in 2020 when the measure was last within the Federal Reserve Board’s 2% target. It is up from 2.7% in 2025. READ MORE >
EMPLOYMENT:
The number of unemployed in September totaled 7.1 million workers, producing a jobless rate that came in at 4.2%, remaining in the narrow range of 4.1% to 4.3% since March, according to the Bureau of Labor Statistics.
The labor market is being anchored by low layoffs with sluggish hiring as employers deal with what economists deem as fallout from tariffs and rising prices from the US-Israeli war with Iran.
Layoffs in the U.S. have fallen to a four-year low, while employers’ hiring plans are up 3% this year, according to new labor data.
Employers have announced 573,195 job cuts through September this year, a nearly 40% decline from the first nine months of 2025. On a monthly basis, layoffs dropped 20% in September to 43,281 from a year earlier, the lowest level in four years.
The data suggests the labor market remains solid, even if hiring isn’t as strong as it was in the post-pandemic years. READ MORE >
MONETARY POLICY:
Despite stubborn inflation but with federal elections looming, the Federal Reserve opted to hold interest rates steady with policymakers expressing a desire to wait for more economic data before tightening the money supply further.
For now, the overnight funds rate remains in the range between 3.75%-4%. But, if current pricing pressures continue, a majority of Fed officials have indicated that another increase in the benchmark rate by a quarter point was likely at their next and last meeting of the year on December 9.
In its statement following the meeting, the Federal Open Market Committee said: “Inflation remains elevated. The accumulation of more information will help the committee determine the policy stance appropriate to ensure a timely return of inflation to the committee’s 2% goal. The committee will deliver price stability.”
At a news conference following the October meeting, Fed Chair Kevin Warsh said although energy prices have remained elevated since the board hiked the rate rates by a quarter point in September, there are market-based measures showing that inflation recently has eased. READ MORE >
GLOBAL ECONOMY:
The global economy is irrevocably linked to the future of artificial intelligence – a connection that is producing greater-than-expected resilience among the wealthier nations that are riding the AI wave while blunting shocks of widening Middle East conflicts and lingering trade tensions. But developing countries on the sidelines of the AI boom have greater susceptibility to spiking energy costs and weaker demand.
The enormous scale and penetration of the technological boom also are creating new concerns about the consequences, if the AI revolution fades, for rich and poor countries alike.
Recent estimates by economist Stijn van Nieuwerburgh of the Columbia Business School are that U.S. spending on data centers and infrastructure will exceed $10 trillion through 2032 and annually average 3.6% of GDP.
AI was at the center of discussions at the International Monetary Fund and World Bank Group annual meeting in Bangkok, Thailand, in October. READ MORE >
