(Bloomberg) -- The US economy grew at a solid pace in the third quarter, marking the first advance this year as consumers proved resilient in the face of widespread inflation and the Federal Reserve's rapid interest-rate hikes.
Gross domestic product rose at a 2.6% annualized rate in the July to September period after falling for the first two quarters, the Commerce Department's preliminary estimate showed Thursday. Personal consumption, the biggest part of the economy, climbed at a 1.4% pace, better than forecast but still a slowdown from the prior quarter.
The median projection in a Bloomberg survey of economists called for a 2.4% rise in GDP and a 1% advance in personal consumption.
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The details of the report showed a strong increase in business investment, bolstered by equipment and intellectual property products. Consumer spending was driven by an increase in outlays on services. The biggest contributor to GDP was the volatile net exports category.
A key gauge of underlying demand that strips out the trade and inventories components -- inflation-adjusted final sales to domestic purchasers -- rose 0.5% in the third quarter.
While the quarterly expansion may help alleviate concerns that the US is already in a recession, the economy's main engine -- consumer spending -- remains under pressure from the highest inflation in a generation. A strong labor market and savings amassed over the course of the pandemic have so far provided Americans the wherewithal to keep spending.
It's unclear how long households can hold up as the Fed's efforts to tame inflation pose headwinds to growth. In the near-term, it's driven up mortgage rates to the highest in two decades, causing a rapid deterioration of the housing market. And in the coming year, many economists expect the central bank's actions to ultimately push the economy into recession.
US stock futures reversed losses following the report, while short-term Treasury yields fell.
--With assistance from Kristy Scheuble and Augusta Saraiva.
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