U.S. Q3 GDP Accelerates to 3.4% as September PCE Inflation Reaches 3.6%

The U.S. economy grew at a 3.4% annualized pace in the third quarter of 2026, the Bureau of Economic Analysis said Thursday in its advance estimate, up from 2.2% in the second quarter and faster than economists had forecast. Consumption, investment and government output all increased while the trade deficit widened, and nominal GDP grew at a 5.6% annualized rate. Consumer spending rose at a 3.8% annualized rate.

The quarterly inflation gauges cooled. The BEA said the PCE price index rose at a 2.1% annualized rate in the third quarter, down from 5.0% in the second, and the core index excluding food and energy rose 2.5%, down from 3.3%.

The monthly data released at the same 8:30 a.m. ET slot pointed the other way. In September the PCE price index rose 0.5% from August and 3.6% from a year earlier, while core PCE rose 0.3% on the month and 3.1% on the year, according to the BEA; both annual rates were in line with the consensus figures posted alongside the release. Personal income rose 0.2% and spending 0.5%, and the saving rate was 3.8%. Underneath, core services prices excluding housing rose 0.37% in September, lifting their 12-month rate to 3.6%, matching the highest reading since 2024, and core goods prices are now up 2% from a year earlier, said Nick Timiraos of The Wall Street Journal.

Initial jobless claims came in at 194,000 for the latest week. Taken together, above-trend growth, a firm labor market and core inflation near 3.1% leave the Federal Reserve little reason to ease, and some market commentators are now arguing for a December rate hike. The next inputs are October payrolls and CPI ahead of the Fed's December meeting.