U.S. Economy Accelerates to 3.4% in Third Quarter as Inflation Remains Elevated
Key Facts
U.S. real gross domestic product grew at an annual rate of 3.4% in the third quarter of 2026, compared with growth of 2.2% in the second quarter, according to data from the U.S. Bureau of Economic Analysis. The reading showed growth accelerating between the two quarters, with the comparison remaining on an annualized basis. The bureau attributed the increase to higher investment, consumer spending and government spending. These contributions were partly offset by a decline in exports, while imports rose. These components put domestic spending and investment at the forefront of the factors the bureau cited to explain third-quarter growth.
September data showed that the personal consumption expenditures price index, the inflation measure tracked by the Fed, rose 0.5% from the previous month. The core index, which excludes food and energy, increased 0.3% month over month. Year over year, the headline index rose 3.6% in September from the same month a year earlier. The annual increase in the core index reached 3.1% over the same period. The monthly and annual figures offer two different readings for the period, with the annual core increase at 3.1% and the monthly increase at 0.3%.
In a decision issued on 28 October, the Federal Reserve kept its target range for the federal funds rate at 3.75% to 4%. The decision passed by 10 votes to two, according to a statement from the Federal Open Market Committee. The statement said that "economic activity has been expanding at a solid pace," adding that "inflation remains elevated." The central bank's assessment combines a pace of activity it described as solid with an inflation level it said remains elevated. The target range was unchanged in the decision, despite the two dissenting members taking positions that differed from the committee majority.
The U.S. dollar against the Canadian dollar closed at 1.3989 on 29 October, according to EL7 data. It had closed at 1.39951 on 28 October, meaning the latest close was below the previous day's level. The reading represents the number of Canadian dollars per U.S. dollar. This daily close differs from a description of the pair's movement during the trading session, as the available figure is limited to the closing price on each of the two days. Comparing the two closes provides a specific indication of the pair's movement between 28 and 29 October.
The upcoming releases include the U.S. Employment Cost Index for the third quarter of 2026 on 30 October at 08:30 a.m. Eastern time, according to the Bureau of Labor Statistics. The bureau has thus set a date for a release concerning employment costs during the third quarter. The Bureau of Economic Analysis has also set 25 November for the release of the second estimate of U.S. third-quarter GDP, along with corporate profits. The second estimate will follow the initial reading, which recorded annualized growth of 3.4%. The November release will be the next step in updating the third-quarter growth estimate reported in the initial data.