New government data shows the U.S. economy picked up steam over the summer, but so did inflation.
According to the data, the economy grew at a 3.4% pace in the third quarter, which was faster than expected, up from 2.2% in the previous quarter.
While the economy grew, Americans are continuing to deal with higher prices, from the grocery aisle to the gas pumps.
The Fed’s preferred inflation gauge climbed half a percent in September, pushing the annual inflation rate to 3.6%. The Federal Reserve announced Wednesday that its key rate would remain unchanged at about 3.9% as inflation remains elevated.
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“Inflation remains elevated,” the Fed said in a statement released after its two-day policy meeting. The Fed said holding rates steady would allow for “the accumulation of more information” to help determine what policy it should pursue to ensure inflation returns to the central bank’s 2% target.
Consumer spending remained strong, rising half a percent, even as personal incomes rose just two-tenths of a percent.
In addition, the Labor Department released data showing layoffs remain low, with initial jobless claims edging lower to a seasonally adjusted 194,000.
