US economy posts strong growth, inflation stubbornly high in challenge to Trump

- Strong GDP growth - The strong GDP growth will come as a boon to Trump, who has touted the strength of the economy despite the high prices that have posed a challenge to households across the country. Much of the economic growth has been driven by an investment boom in Artificial Intelligence (AI) technology, which has seen companies spend billions on new models and in building the data centers that power them. The BEA said the acceleration in GDP growth was driven by an increase in investment and an upturn in government spending, which were partially offset by a decrease in exports. Imports -- which are a subtraction in the formula for GDP -- also increased more in the third quarter than the previous one. Thursday's GDP data was an advance estimate released by the BEA, with two further estimates due in the coming weeks that could see the number revised.

Economists have warned for months that while US GDP growth has remained resilient despite price pressures from the war, outcomes have been highly uneven, with wealthier households prospering while working class families struggle. - Fed implications - The Fed prefers to use the PCE price index when gauging inflation, as it takes into account a broader range of household expenditures than Consumer Price Index (CPI) inflation. On Wednesday, the US central bank voted to keep interest rates steady, citing the need for more data to gauge how best to battle the surging inflation. Chair Kevin Warsh reiterated the Fed's commitment to its long-term two-percent target for PCE inflation, which it has not achieved for more than five years. He termed current inflation levels "too high" but cautioned against moving too quickly, saying the Fed had seen some tightening of financial conditions in response to the Fed raising interest…