Prior quarter 2,2%The details GDP: 3.4% vs 3.2% expected. Prior revised to 2.2% from 1.5%.Real final sales: 1.7% vs 2.0% expected. Prior 2.8%Consumer spending: 3.8%. Prior 3.8%.GDP deflator: 2.2% vs 3.5% expected. Prior 6.1%Core PCE prices: 2.5% vs 2.4% expected. Prior 3.3%PCE prices: 2.1% vs 2.6% expected. Prior 5.0% What drove the GDP increase?The 3.4% increase in Q3 GDP was supported by investment, consumer spending and government spending. Trade was the main drag, with exports falling and imports rising.Investment was the largest positive contributor, adding 3.27% to growth. That category includes business investment, housing and changes in inventories.Consumer spending added roughly 2.52%, reinforcing the importance of household demand to the expansion.Government spending added 0.90%, providing another source of support.Lower exports subtracted 0.68%, reflecting a decline in sales of US-produced goods and services abroad.Higher imports subtracted 2.64%. Imports are deducted because GDP measures domestic production, while spending on imported products is included elsewhere in the accounts.The takeaway is that domestic spending carried the economy while trade weighed heavily on growth. Investment was a major support, but the distinction between productive investment and inventory accumulation matters. With final sales growing more slowly than headline GDP, the sustainability of the inventory contribution will be something to watch.From the BEA: Behind the GDP increase: inventories, computers and consumer spendingThe BEA’s breakdown shows that inventory accumulation, computer equipment and consumer spending supported the 3.4% annualized increase in Q3 GDP, while trade weighed on growth.Investment: Growth was driven primarily by inventories and equipment. Wholesale businesses and manufacturers increased inventories, led by nondurable goods. Equipment spending was supported by computers and peripheral equipment.Consumer spending: Both services and goods increased. Health care, restaurant meals and accommodations led services spending, while prescription drugs were a major contributor to goods spending.Government spending: Federal nondefense spending accounted for more than the overall increase. However, the BEA highlighted an accounting effect from smaller Strategic Petroleum Reserve oil sales compared with Q2. That lifted measured government consumption, but the BEA said those sales have no direct effect on overall GDP, because they are reflected elsewhere in the accounts.Trade: Exports fell, led by petroleum and related products. Imports increased, with capital goods excluding autos the largest contributor (AI spending). Falling exports and rising imports both weighed on GDP.The details show solid consumer demand and strength in computer equipment spending, but inventories also played an important role. That helps explain why headline GDP outpaced final sales and leaves a question for coming quarters: will businesses sustain production as those inventories are sold?Overall SummaryThe US economy grew at a 3.4% annualized pace in Q3, according to the advance GDP figures from the Bureau of Economic Analysis. That was above the 3.2% consensus estimate and slightly stronger than the Atlanta Fed’s final 3.3% GDPNow forecast. Consumer spending remained healthy, growing 3.8%, matching the preceding quarter.The result supports Federal Reserve Chair Kevin Warsh’s message at yesterday’s press conference that growth had strengthened. Warsh said first-half growth had been revised to 2.4% from 1.8%, with Q3 likely running above 3%, led by healthy consumer spending.However, the details were more mixed than the headline. Real final sales grew just 1.7%, below expectations and down from 2.8% previously. Final sales exclude inventory changes, so that gap indicates inventory accumulation helped lift headline GDP. Inflation cooled sharply from Q2, although core PCE prices at 2.5% were slightly above the 2.4% estimate.Quick analysis: Stronger growth, steady consumer spending and cooler inflation give the Fed some room to assess incoming data. The headline would normally support the dollar and Treasury yields, but weaker final sales and the softer broad inflation readings could temper that response. The key question is whether growth can sustain this pace without as much help from inventories.What this report measures: Gross domestic product, or GDP, measures the value of goods and services produced in the United States. These quarterly growth figures are adjusted for inflation and expressed at annualized rates. The advance estimate is the first reading and is subject to revision. This article was written by Greg Michalowski at investinglive.com.